Inflation inflates income dollars and cost dollars, because they're both made of dollars.
Are you talking about some kind of consumption that isn't measured in dollars? I'm not talking about the amount of things that people are consuming, I'm talking about the percentage of their income that they are spending on consumption. Whether that buys a can of peas one year and a yacht the next makes very little difference. If during that first year, everybody bought a can of peas, and in the second, everybody bought a yacht, consumption hasn't increased.
In other words, if your savings rate had to lower because you make less money and things are more expensive, your consumption has gone up.
edit: I'm not trying to make a statement about Americans being wild spenders; I'm trying to make a statement about the possibility of a consumption driven recovery. Americans are very close to the limit of the ability that they have to spend more.
Nominal dollar values is but one way to measure consumption.
The original comment I was elaborating on was talking about other factors that can impact PSR without a change in consumption patterns as measured by what goods and services are received not the nominal value spent on them. One important and very real factor is that nominal income growth for most workers has not grown as fast as inflation. On a macro level you're right, but at the individual level it's that mismatch that matters.
I wasn't talking about measuring consumption in dollars but in value received. If I buy a can of peas this year for $1 and a can of peas next year for $1.10 (assuming no factors specific to the peas or can market), then I have consumed the same amount in terms of the benefit I get. You're also right that I've consumed more in terms of nominal dollar values, but nominal dollar values wasn't the measurement stick I was using when I said they consume the same amount.
Are you talking about some kind of consumption that isn't measured in dollars? I'm not talking about the amount of things that people are consuming, I'm talking about the percentage of their income that they are spending on consumption. Whether that buys a can of peas one year and a yacht the next makes very little difference. If during that first year, everybody bought a can of peas, and in the second, everybody bought a yacht, consumption hasn't increased.
In other words, if your savings rate had to lower because you make less money and things are more expensive, your consumption has gone up.
edit: I'm not trying to make a statement about Americans being wild spenders; I'm trying to make a statement about the possibility of a consumption driven recovery. Americans are very close to the limit of the ability that they have to spend more.