Consumers: Down, but Still Spending

The most recent data show that twice as many respondents were hearing "unfavorable" news about business conditions by December than a year earlier. Over the same period, the index of consumer expectations -- which the surveyors say is "noted for its ability to foreshadow recessions" -- had already dropped more than 19%. That was before the credit crunch accelerated earlier this year and foreclosure rates spiked higher.

Also, today's consumer is jaded and less hopeful that things will improve than those who were surveyed in past decades, according to Dean Baker, an economist and co-director of the Center for Economic and Policy Research.

Baker notes that in the 1950s and 1960s, people had "real expectations that things will get better year after year." That was followed by two decades of stagflation, and then the recent peaks and dips from the stock-market and housing bubbles.

"This decade, I don't think people take [economic prosperity] for granted in the same way," he says.

A top adviser to Republican presidential candidate John McCain went as far as to say earlier this week that the country is only in a "mental recession," and has "sort of become a nation of whiners," according to the Washington Times. The comments ruffled some feathers, but rang a note of truth; the adviser, former Senator Phil Gramm, noted that the economy is still growing and there is no telling when or whether it will begin to contract.

Better Benchmarks

Despite the resiliency so far this year, many are predicting a further slowdown ahead, once the rebate checks are cashed and spent and the housing market continues to vacillate. Others are questioning when -- not whether -- the U.S. will officially enter a recession.