Well one possibility is that people believe their leaders and their leaders are (lying to them) saying “Everything is great! Now get out and spend, spend spend!”
On this forum I can’t resist mentioning that possibility.
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More likely, the spending levels are K-shaped.
Your aggregate numbers look good because the top is doing very very well,
but when we disaggregate we see the bottom 50% is hurting more than usual.
For households $0-60k spending is not up. It is flat since 2023, in fact flat since pandemic. (Zero growth in 4 years, but mounting credit card debt. Pretty bad, huh?)
Is the PCE increase being driven by demand, or by inflated current prices. Are we spending more and getting more, or are we spending more and receiving less in return for that spending.
The reality is that when it comes to spending money all to many people are completely irresponsible and simply rack up credit card debt. So not only is our economy and GDP built on government debt but also consumer debt.
Hard to believe that it is an increase of anything more than increased costs. It definitely isn’t across all economic demographics. Defaults are up, disposable income is down for the lower and middle income portion of the population.
Now you’re getting it.
Now you’re focusing the truthful message.
Meanwhile . . . guess how the lower end (households under $65k comboned income) are still spending as flat-much as they used to? (hint in the thred title)
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The good news is this is deliberate and can be halted if saner people get in charge.
It is deliberate policy to lower rates etc. in order to keep consumer spending high/
(You know, because people maxing out their credit cards to get the same amount of stuff is a good thing.)