I agree with the first part, the debate is whether that is a good thing or bad thing, but the second part is not nearly as simple as you indicate.
Real income (which is inflation adjusted) has risen modestly and savings has also grown a bit in raw figures, but as always numbers are misleading. If you factor out durable goods spending then real income is flat at best....and despite durable goods pricing tanking the CPI grew 1.1% the last full quarter.
Now inventories are growing. Another tell the tale industry is transportation and you have worn out mothballed trucks that cannot be replaced due to the still tight credit and an uptick in demand from port cities due to imports........all in all you cannot find a truck and truckers are collecting massive amounts of unemployment because they cannot find a chariot.
All his means is income grew faster than spending and if you look at a 4% overall savings rate which is a .2% increase and a .5% increase in wages...coupled with a .4% increase in taxes, a .2% increase in prices (which excluding durable goods is more like .4%), coupled with increasing unemployment rate............then you got a decrease in real economic consumer activity....which in my humble opinion has led to the decrease in consumer confidence......
GDP as been revised downward, unemployment numbers cannot be hidden much longer, the run on durable goods and housing is over for many reasons, we are not seeing job growth, inventories are starting to buldge,....all in alll...it sucks IMHO....
On a positive note the Euro continues to plummet which buys time and helps short term but is not good long term, the yuan is now floating and as long as Europe is in turmoil and China is not balanced from a production/consumption basis then we can tread water, Chinese are now seeking minimum wage requirements and regulatory obstacles are increasing.....India, Malaysia, and a couyple other smaller countries are key to keeping pricing in line as the Chinese divest of the dollar long term....problem is that long term we will compete on a consumption basis with China and we are in a BBBBBAAAADDDDDDD situation debt wise and China owns our mortgage.............
My take is we had a run based on durable goods incentives and tax breaks for housing and major purchases and other incentives and we are coming back to reality which is fewer workers working longer hours and spending more to buy less...............but just my 2 cents................but not near as simple of analysis as indicated............again IMHO.........
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