Massive government intervention has helped stop the economic decline, but it also has slowed the closing of the imbalances that pushed us into the recession in the first place, consumer overspending among them.

With savings rates near zero and debt levels hitting a record high of 120 percent of annual income at the onset of the recession, spending had to come down. And it did, with the expected results for the economy. Now personal savings rates are running slightly over 3 percent of income - still too low, but moving in the right direction. More importantly, consumer spending is on the rise as well, which is clearly good for the economy in the short run. But the fact that spending is up should raise warning flags. After all, real income was battered by the loss of jobs and has yet to recover. How can Americans be spending and saving more even as they earn the same amount?

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