Stagflation is hitting the US economy and it has many consumers pessimistic about the future. Increasing food and gasoline prices are edging their way into Americans' pocketbooks while their spending outlays even managed to spend more last month compared to December. Since income growth is slowing, this means that more Americans are likely turning to credit to get their daily allowance while saving nothing for the future. In fact, for the first time in 50 years, Americans spent more than they earned for the third consecutive month!

From the New York Times:
Rising prices are forcing Americans to spend more and save less, even as the growth of income slows. Consumer spending, which accounts for more than two-thirds of gross domestic product, was flat in January for the second month in a row, when adjusted for inflation, the Commerce Department said on Friday. Other reports showed a decline in consumer confidence and diminished business activity in the Midwest.