Consumer spending fuels growth. Really? Think again!

So, ... buried in the news report about a rise in consumer spending is this:

Most consumers spent more of what they earned and saved less. The saving rate dropped to 3.7% of after-tax income in February. That was the lowest level since August 2009. It had averaged 4.7% for all of last year.

Americans are also taking on more debt. Consumer borrowing increased from November through January by the most in a decade for a three-month stretch. Yet the increases were driven almost entirely by auto and student loans. Credit card debt decreased in January and remains well below pre-recession levels.

Dales cautioned that at some point, consumers won't be able to draw further on their savings. Further job gains are needed to boost consumers' income.

Hmmm ... job growth has stagnated, and consumers are taking on more debt.  Isn't this a cause for worry, rather than for the stock market to go up?  What the heck am I missing in this picture?

There is at least the old reliable Robert Reich who makes sure that I am not coming across as an idiot:

Fed Chief Ben Bernanke – who doesn’t have to face voters on Election Day – says the U.S. economy needs to grow faster if it’s to produce enough jobs to bring down unemployment. But he leaves out the critical point.
We can’t possibly grow faster if the vast majority of Americans, who are still losing ground, don’t have the money to buy more of the things American workers produce. There’s no way spending by the richest 10 percent – the only ones gaining ground – will be enough to get the economy out of first gear.

Even more worrisome is this: the increase in student loan debt.  Students are borrowing more and more hoping that a college degree will transform into well-paying jobs.  But, that, too, is a mirage on many fronts for most students!  The trillion-dollar debt means:

as more people go to college and assume bigger loans for education, they may take longer than previous generations to hit key milestones such as buying a house or getting married, U.S. officials and economists say. It could take longer for heavily indebted graduates to save money for a down payment on a home, or it could be harder for them to qualify for mortgages.
Rohit Chopra, student-loan ombudsman for the Consumer Financial Protection Bureau, said student debt could ultimately slow the recovery of the housing market. "First-time home-buyers are a substantial part of the housing market," Mr. Chopra said in a speech at the banking conference in Austin. "Instead of saving for a down payment, these borrowers are sending big payments every month."
Student debt is a burden not just for recent college graduates in their 20s but also parents, who often co-sign their children's student loans, as well as midcareer professionals who opted to go back to school during the sluggish recovery.

 Meanwhile, we are well on our way to think of debt as from the cradle to the grave:

new research shows a trend that’s even more troubling than Americans going into hock to pay for a college degree: Apparently, some parents are taking out five-figure loans to finance private school tuition for K-12 kids. Yes, student loans even to pay for kindergarten.