Company after company has been reporting higher earnings and generally higher revenues than expected by the Wall Street Analysts. This is starting to build strong evidence that the economy is not as bad as these analysts think it is.
Now, there are problems in the economy but as I've said before, when someone loses a job or goes through a foreclosure it doesn't necessarily mean that they stop spending. In the case of the foreclosure, if they are still employed, it may mean they have more money to spend.
In fact the main loss of spending is not really related to either of these two events, it was related to the loss of home equity and the ability to borrow against that equity for large purchases. This and the negative environment and loss of wealth in the stock market, caused many people who were still employed to slow down spending. However, with the exception of large purchases that had previously been financed by using home equity they still have the same disposable income they had previously.
Consumer spending is not dead, it may be reduced, but it is growing again.
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