When You're In a Hole, Dig Faster

A new week, a new month, and once again we have in hand a new report on Americans' spending and income, just released from the U.S. Commerce Department's Bureau of Economic Analysis. And what does it show? We're still broke ... but hey, at least we're spending faster than ever:

For the ninth month in a row, the indefatigable American Consumer has done his (and her) part to lift the economy out of recession. That's nine straight months of increasing spending -- but as the chart up above shows, at least three straight months of the income gains needed to support such spending either falling or stagnating. (And in the fourth month, September, income was actually down.)

And once again, Americans' spending came at the expense of our saving -- as the personal savings rate slipped to 5.3%. Ah, well. Sanity was fun while it lasted.

Where do we go from here?
Clearly, this course is not sustainable forever. But for the time being, it's got the Dow pushed up over the 12,000 marker, and investors are smiling. Why is that?

Well, consider where the spending is going. Private wages and salaries grew $15.5 billion in December, with much of that money going to employees of the services industry. Because we already know that many of these jobs are of the "temporary" variety, this suggests good things for investors in companies like SFN Group (NYSE: SFN  ) and Kelly Services (Nasdaq: KELYA  ) , both of whose stocks crushed the market last year.

Farmers are benefitting as well, with incomes up $2.8 billion atop November's $2.7 billion rise. Because these farmers can be expected to spend at least part of their wealth on new machinery, this bodes well for the likes of Deere (NYSE: DE  ) and Caterpillar (NYSE: CAT  ) -- two other stocks that are "growing like weeds."

Foolish takeaway
Personally, I look at these numbers, these trends, and feel strongly that the U.S. economy is a bull in search of a matador. These kinds of spending increases just can't be sustained without more income to back them up. But ... for the time being at least, there are isolated areas where optimism isn't totally misplaced.

That's my take on BEA's latest facts and figures. But what do you think? Take the Foolish Rorschach test, and tell us what you see in the chart up above, below.