Consumers: Down, but Still Spending

Not all of that can be attributable to a robust shopper -- economic stimulus checks issued by the government starting in May have supported a good deal of the spending. Many of those dollars have gone to discounters like Wal-Mart(WMT Quote), Target(TGT Quote), Costco(COST Quote) and BJ's(BJ Quote) where consumers are piling up on low-cost goods, as well as local Exxon(XOM Quote), BP(BP Quote) and Hess(HES Quote) stations where they're filling up with costly gasoline.

In addition, some of the 2% GDP growth over the last four quarters is attributable to the export sector, which has been booming thanks to the devalued dollar.

The Lehman report notes that while correlation between consumer sentiment and consumption has historically been strong, it "does not necessarily imply a causal relationship." They developed an index that combines consumer expectations with other factors like income, wealth, unemployment and the Federal Reserve's targeted interest rate, to get a more accurate picture.

Historical Comparisons

While it seems like consumers are saying things are as bad as they were in the slumping 80s, making historical comparisons can be tricky.

The first problem is media saturation. Even those who managed to avoid the financial firebombs of the past year have surely been informed about how bad things have gotten, and then reminded of it repeatedly. The inundation of negative economic news starts with the morning newspaper and continues throughout the day on the Web, handheld devices, the radio and 24-7 cable news networks that weren't so pervasive in decades past.

The correspondence is evident when looking at how consumers characterized the type of news they had heard about the economy over the past few months in the Reuters and the University of Michigan survey.