The great consumer deleveraging lie has been ongoing for the last six months. The savings rate has "surged" from 4.8% in the 2nd quarter of 2008 to 5.8% today. The savings rate is calculated as what is left over when you subtract personal consumption expenditures from disposable personal income. The surge in saving is the result of the Federal government borrowing from the Chinese and handing it to consumers to spend. If the government wasn't transferring these funds from future generations to current generations, the savings rate would be 1.2%.
Revolving consumer debt (credit cards) has declined by $173 billion in the last two years. This must mean that consumers are deleveraging. 
Total consumer credit peaked at $13.9 trillion in the 1st quarter of 2008 and currently stands at $13.4 trillion. It sure looks like consumer deleveraging. Consumers must have paid off $500 billion of debt. But, the facts obliterate this fallacy. The Wall Street banks have written off in excess of $600 billion since the 1st quarter of 2008, as reported by the Wall Street Journal. This means that consumers are actually charging more on their credit cards than they were in 2008. Having your debt written off, rather than paying it off says much about the great economic recovery of 2010.
The false reports circulating on network news programs is that Americans are paying cash, rather than using credit cards. This is completely false, as both Visa and Mastercard reported increases in transaction volumes in their last quarters. Having worked for a big box retailer, I know that the average credit card transaction is 50% to 70% higher than the average cash transaction. If people were truly charging less, the average ticket at the major retailers would be plunging. Retail sales would be plunging. They are not plunging, as the major US retailers report decent comparable store sales in the 2% to 5% range.
The National Retail Federation has forecast November- December holiday sales will rise by 2.3 percent from a year ago, the most since 2006. A Bloomberg survey taken Dec. 2 to Dec. 8 showed economists raised projections for consumer purchases, the biggest part of the economy, to 2.6 percent for next year, up from their 2.3 percent estimate the prior month.
A little reality check about retail sales is in order. According to the US Census Bureau, total retail sales over the last few years are as follows:
- 2007 --" $4.5 trillion
- 2008 --" $4.4 trillion
- 2009 --" $4.1 trillion
- 2010 --" $4.4 trillion (estimated)
The fact is that there are thousands more retail outlets today than there were in 2007, and total sales are still below the level reached in 2007. Not only that, but even using the government manipulated CPI, inflation has risen 8% since 2007. On an inflation adjusted basis, 2007 retail sales in today's dollars would be $4.9 trillion. Using the real inflation rate of 20% over this time frame would generate an inflation adjusted retail sales figure of $5.4 trillion. As you can see, the great retail recovery of 2010 is a sham. Comparable store sales increases of 3% are inflation adjusted decreases of 5%. If you drive around with your eyes open, you would think the hot new retailer in America is called SPACE AVAILABLE.
I hate to be a wet blanket during this festive holiday season, but the truth is that there is no self sustaining recovery happening. The powers that be, with the help of their lackeys in the mainstream media are desperately trying to convince you that everything is alright. It is not alright. It is getting worse by the day. The only people spending are Lloyd Blankfein and his ilk, while middle class Americans sink further into despair and debt.
Who's lying? You know.
RULING ELITE
