Consumers Give Spark Of New Hope For Econ Revival

Those negative forces — or the emergence of new ones, like the swine flu outbreak — could cause consumers to do an about-face and ratchet back spending, throwing the economy into another tailspin.

"The economy is definitely not out of the woods yet," said Brian Bethune, economist at IHS Global Insight. But, he added: "The good news ... is that the most severe phase of the recession is behind us."

The economy logged a worse-than-expected 6.1 percent annualized drop in the first three months of the year despite the rebound by consumers, the Commerce Department reported. The culprits behind the poor overall performance: sharp cutbacks by businesses, especially in inventories of unsold goods, and the biggest drop in U.S. exports in 40 years.

The decline was nearly as sharp as in the final three months of last year. That's when the economy shrank at a 6.3 percent pace, the worst showing in a quarter-century. The biggest pullback by consumers in 28 years figured prominently in that downward spiral.

All told, the economy logged its poorest six-month performance since the late 1950s.

The bleak picture underscores the damage caused by the housing, credit and financial crises — the worst since the 1930s. The recession, which began in December 2007, has battered the national economy and wiped out a net total of 5.1 million jobs.