Consumers: Down, but Still Spending

It's the perfect storm of economic malaise: Surging fuel and food prices, declining home values, a stock market waltzing back and forth into bear territory and job cuts combined with stagnant wages.

No wonder consumers are so gloomy.

But while consumer-confidence surveys are watched closely for clues about the country's fiscal health, shifting tides in the economy and society at large have made them less relevant and less accurate.

One prominent index was recently pegged at 56.4 -- the third-lowest reading on record since the poll was first conducted in 1952, according to Reuters and the University of Michigan. The last time people felt quite so bad about the economy was during dramatic recessions in the 1980s.

At that point, inflation was three times as high as it is today, loans were five times as expensive and a larger swath of the population was unemployed.

While no one is arguing about whether things have gotten bad, are they really that bad? In short, the answer is no -- but that doesn't mean things won't get worse. And just because consumers think the economy is headed south, it certainly doesn't mean that a recession is imminent.

Actions Speak Louder Than Words

While consumers have been saying they plan to spend less, they have continued to consume at a relatively healthy rate. And while they have been casting gloomy statements about the economy, U.S. output has remained relatively strong.

"Thus far, the economy has shrugged off the shock," according to a weekly report by Lehman Brothers economists. "Consumption has slowed, but seems to be defying the laws of economic gravity."

What best describes your personal spending power over the next few months?
	Buying lattes every day. No macaroni and cheese, but no filet mignon either. Pockets turned inside out, panhandling.