Anne Mini has recently been talking about who should and shouldn't be a valued feedback-giver to the aspiring writer (parts I and II). If you haven't read her posts yet, I highly recommend you do so before continuing reading this post of mine. I can wait!
Now that you have returned, let me first note I certainly agree that Anne's logic applies to almost every situation. However, most people tend to believe there are exceptions to every rule, and of course they tend to believe they fall into the minority that is the exception. Especially when it comes to issues like this.
Interestingly, I've read several published authors who noted their spouses were their first reader/editor. Stephen King, Orson Scott Card, and Bill Watterson (who wrote/drew the comic strip Calvin and Hobbes, and thus wasn't truly in this industry) all come to mind. I'm sure you could come up with many other examples.
There are two points I'd like to make on this score. First, readers would do well to remember that what a person says when publicly thanking his/her beloved is not necessarily the full truth. Secondly, most of these writers noted looking for general reaction from their spouse, usually on a chapter-by-chapter or realism basis, rather than on a line-by-line basis. But I'm sure it varies. At any rate, aspiring writers would do well to not just blandly take such comments of published writers at face value.
That said, I do believe my wife is an incredibly valuable first reader/editor to me, even on a line-by-line basis (and I believe I have a good litmus test for objectively determining she is -- more on that below). First of all, she has a degree in comparative literature, and is a voracious reader of the same genres I write in -- she's much wider read than me in general, actually. Secondly, she's done enough writing to know what she's doing. She hasn't written as much fiction as I have, but it's not a race.
All of that just gets her into the ball field of being a potential first reader, except for the pesky issue that she's my spouse -- and here's where my litmus test comes in. Ask yourself this: would you or your spouse be offended/upset/surprised/displeased by trading constructive critiques post-coitus? As in, “that wasn’t very good for me?” If you’re uncomfortable answering that to yourself (don’t tell me -- I really don’t want or need to know) then your spouse probably can’t be your editor regardless of his/her other qualifications.
But if you’re so uninhibited around each other that giving direct, un-couched feedback on your most intimate acts is a normal and accepted practice between the two of you (after all, the comments are only designed to help), then you can probably be reasonably certain they aren’t couching things when discussing your novel. Although, even then, be on guard at first -- it’s far too easy for your beloved to want to be supportive at the expense of not being constructively critical at first. Here’s a good law of editing (in the mathematical sense) I’d like to propose: if all your feedback from your first reader is unequivocally positive, it wasn’t helpful. Even if the person loves your book to death, he or she should find about ten thousand things wrong with it, and tell you just why each one is wrong (or say it just doesn’t rub them right if they can’t tell).
So that’s why I think my wife and I are one of the very few exceptions to this particular rule -- yet even then, she is my first reader, but certainly not my last before querying. I think my litmus test holds water, but I’m not aware of many people who seem likely to pass it (of course, it isn’t exactly a topic I ever discuss with anyone), so for most aspiring writers this is probably a moot point in the first place. When in doubt, follow the advice Anne has already laid out in her posts on this subject.