Zandi thinks the underwater mortgage factor may also have juiced up consumption in the first quarter: Millions of homeowners are choosing to default on their mortgages or aren't otherwise making their monthly housing payments — and that's freed up billions of dollars in cash for consumers.
U.S. Housing and Urban Development Secretary Shaun Donovan said that's hard to know, but he estimated that only 10% of delinquent homeowners who have the ability to pay are opting not to do so.
Still, that translates into hundreds of thousands of families. And with monthly payments averaging roughly $1,500, said Economy.com's Scott Hoyt, a good portion is probably being spent.
Overall, consumer confidence among the general population remains historically low, according to various surveys, though it has ticked up recently.
Shawn DuBravac, chief economist for the Consumer Electronics Assn., sees some encouraging signs. In addition to a pickup in affluent consumers who are buying once-deferred home theater systems for as much as $150,000, stores are reporting that more shoppers are making bigger purchases in their visits, he said. "We see a higher selling price in 2010."
But DuBravac also remains wary. He said recent data indicated that 18% of personal incomes are from unemployment benefits and other government payments, such as social security.
"We've seen spending increases, but it's come at costs in savings as opposed to real income increases," he said. "What we want to see is broad-based income growth, and not just a recovery in wealth."
Mike Grossman, who lives in the Dallas area, exemplifies the employment challenges facing many consumers — and the recovering economy.
This year, he spent about $6,000 for tools and supplies to landscape his home. But in March his software firm was sold to another company and his treasurer's job vanished.
Grossman, 45, has been looking for work ever since. "There's just more competition out there," said the single father of 13-year-old twin boys.
And until he lands a job, Grossman said, he won't be doing much spending.
