Deflation Boosts U.S. Economy
Despite the fact that the savings rate rose significantly, real consumer spending rose as much as 0.6% in November, following 5 straight months of declines. This means that the economy probably didn't contract as much as most people have believed, though it will still definitely contract.
But how could real consumer spending increase even as the savings rate rise? Simply because real household income rose sharply, by 1.1%, which is a lot for a single month (at an annual rate it's roughly 14%). And why did it rise so much? Because of deflation, as the price index fell by 1.2%. The deflation during that month thus provided a significant boost to the purchasing power of U.S. consumers and so to the entire economy.
This is not meant to suggest that deflation can't in other circumstances have a contractionary effect. But it clearly illustrates that this is not always the case and that deflation thus can have a positive effect, something which is usually neglected by non-Austrians.