“Consumers and economists strongly disagree about which direction the economy is going.

Many economists are looking for at least a modest rebound in the second half of this year. That’s a key part of the reason the Federal Reserve is expected to end its nine-month course of rate cuts and keep rates steady Wednesday.

But 5,000 consumers surveyed earlier this month by The Conference Board, a well-respected private business research group, gave the bleakest six-month outlook for the economy ever in the nearly 42 year history of the survey.” from CNN

The article further includes the information that rising unemployment, a bad housing market and continued tightening of credit all lead to consumers expecting the economy to get worse.  Then, of course, we add in the record high energy prices.

“Lynn Franco, director of The Conference Board’s Consumer Research Center, suggested that with consumers feeling so grim, they may pull back on plans to make big-ticket purchases. That can slow the economy even further than current experts are forecasting.”

Consumers may pull back on plans to make big-ticket purchases?  Why do they think auto sales have dropped for everything but fuel efficient and/or hybrid cars?  The previously rising house equity ATM isn’t producing any more money in most areas, credit is harder to get and consumers don’t have confidence in their future ability to make payments on high ticket items.  But they MAY pull back?

The article does discuss the fact consumer spending accounts for three quarters of the nation’s economic activity.  What happens when that engine sputters?  Recession deepens leading to a further erosion in consumer confidence.  It’s happened before, it’s happening now, and it will happen in the future, economic cycles are something to be expected, I just wish government spokespersons would use a little less spin in their forecasts.