“Rising incomes allowed Americans to spend more in April.”

It’s always interesting to read analysis from a foreign perspective.  The BBC reported on Friday that “US spending grew at it’s fastest rate for 3 months as US workers brought home more money.”

The article noted that a .5% increase in incomes fueled the .6% increase in spending that it termed “a spending rush.”

The article also points out that core inflation rose by only .2% but admitted that once food and fuel were included overall inflation rose by .5%. 

The obvious explanation is that both food and fuel are relatively inelastic and that .4% of the increase in spending was pretty much unavoidable.  What about the other .2% increase in spending?  How about rising interest rates, upwardly adjusting ARMs and a deflating dollar?