Consumers: Down, but Still Spending

Most economists polled recently by the Wall Street Journal said the economy is either in a recession or headed there over the next year. They expect a "substantially weaker" second half of 2008.

If one were to consider consumer sentiment alone, things would appear bleaker than they actually are. Still, Lehman's projections show that through 2009, "without [a] drop in confidence, consumer spending is weak -- with it, it is very weak."

With the economy shifting tides from consumer-driven to consumer-dragged, other indicators that are picking up the slack will gain more significance. Data on exports, inflation and, of course, housing, are most prominent.

The Purchasing Managers Index, which shows whether the manufacturing sector is expanding or contracting, has also become more important: If we're relying on exports, for growth, we need to know how the producers are doing . Still, Baker notes, "Us exporting more means that other countries will have to import more - it's not necessarily easy for us to increase our exports in a substantial way."

Regardless of how much it expands, the export sector won't be a panacea for the economic woes of the average American consumer.

"You may have a job and may be producing stuff but you're shipping it overseas," says Lincoln Anderson, chief economist at LPL Financial. "It doesn't feel as good as a consumer-led economy."