So dispiriting was yesterday’s economic news that perhaps we should view the Dow’s niggling 75-point loss as a harbinger of strength. New home sales fell 9.2% in January, personal income declined 2.3%, and auto sales went in the dumper. Despite all this, however, and even with the shares of Ford and GM off sharply, the blue chip average was never down more than about a hundred points intraday.

Has the relentless attrition of the U.S. auto industry finally exceeded the limits of despair and therefore ceased to be a concern to investors? Certainly it has a bright side for consumers, with GM now offering incentives of as much as $8,500 to anyone willing to take a Chevy SUV off their hands. But with so many unsold 2004 models still cluttering the lots, we shouldn’t be too terribly surprised if incentives eventually hit $10,000 per car.  For me, that would be pretty tempting. I haven’t owned an American car since college, when I drove a well-used ’65 Pontiac Tempest. But if dealers reach the point where they’ll throw in, oh, a Buick for every purchase of a Suburban SUV, I might come around.

How Did We Do It?

But until then, we can breathe a sigh of relief knowing that Wall Street apparently isn’t obsessed with America’s declining manufacturing base. Nor, evidently, is anyone much concerned about the equally dismal shrinkage in personal income. The market seems to have taken this in stride, in a contrarian sort of way. Personal income may have been down 2.3 percent in January, but what’s so bad about that when you consider that December’s figure was goosed by the huge dividend paid by Microsoft to a zillion shareholders?

And lest anyone think a little negative income growth is going to crimp  the American consumer’s style, there was the seemingly paradoxical news that consumption outlays actually increased relative to December’s flat readings. How did we do it?  Here’s my explanation – one cribbed from a George Carlin routine about a furniture store that sells every item for a small loss. Some of you may find my logic Greenspan-esque: Although each of us gets a little poorer whenever we spend money that we don’t have on consumer goods, we make up for it by buying in such huge volume.