Consumer Spending, What's the Deal?

The consumer spending report came out today and it grew by .6% last month which was double the predicted .3%. That is fine and dandy, I strongly expect consumer spending to fall off the face of the earth sooner than later. This is due mainly in part, but definitely not limited to, housing woes.

On the other hand, the Reuters/University of Michigan's financial index of consumer confidence came out earlier this week and it was down to 88.4 from 91.3. So my question is, what's the deal with consumer spending?

Consumers are spending more while their confidence in the economy is declining. Most rational people save money instead of spending money when they feel that rough waters for the economy lie ahead.

U.S. consumers just don't get it. Their spending is completely out of control. Is it because they can't resist that fancy new SUV, or they just can't say no when their kid wants the new playstation of xbox? I don't know, but i bet that it has to do with that and many other things as well. Consumers are addicted to a lifestyle that is out of control and unsustainable.

This lifestyle has been obtainable because of rising house values allowing the consumer to take out more and more equity out of their homes and spend it on goods that depreciate in value, such as cars, boats, and other toys.

The longer it takes consumers to adjust to a new lifestyle that requires them to actually pay for their toys with actual money and not debt from their home, the harder the transition will be.

To use a bad credit pun, U.S. consumers are maxed out, and they still want more. I want to say that U.S. consumers need to realize that the economy is slowing, and will soon turn backwards, but they are already starting to realize it. The consumer confidence levels tell us that they are starting to realize that everything isn't hunky dory any more. They need to act on these notions and not ignore them buy spending, spending, and more spending.