I* have listen to all the cheerleading from the financial pundits that the economy is slowly turning around and yet when I go around talking with the people in my area that is not exactly true.  It is an attempt to make people think things are better so they will spend and borrow….you know commit the same mistakes that has been committed in the past.

In an article for Bloomberg, Shobhana Chandra wrote:

Household income in the U.S. is weakening as the influence of the government’s stimulus plan wanes, prompting economists, Federal Reserve officials and a Nobel laureate to warn that consumer spending may struggle.“Consumers have started to change their behavior and they are going to save more,” said Richard Berner, co-head of global economics at Morgan Stanley in New York and a former researcher at the Fed. “You have pressure on wages, you have employment still declining.”

Wages and salaries, which drive recoveries in spending, fell 4.7 percent in the 12 months through June, the biggest drop since records began in 1960, according to Commerce Department figures released yesterday. The Obama administration’s tax cuts, extended jobless benefits and a one-time Social Security bonus have helped mask the damage done by the worst employment slump since the Great Depression.

Personal incomes, which include interest income, dividends, rents and other payments as well as wages, tumbled 1.3 percent in June, more than forecast and the biggest drop in four years, yesterday’s Commerce report showed. Excluding the effects of the stimulus plan, June incomes would have dropped 0.1 percent after no change in May, according to the report. In May, one-time additional payments to Social Security recipients boosted incomes 1.3 percent.

Nothing on Main Street says there is a recovery…..I have said that the government needs to create demand…kind of like the cash for clunkers gimmick to get the consumer spending….but that is good….but with job losses still raising the gimmicks will not be as effective as they hope.

If you are an investor then you will love the news from the financial clap trap, but if you are working and worrying about what tomorrow will bring then you care little for what the markets are doing.