The reason, as usual, is fear. "Because of the markets, people have felt very wealthy the past several years," Baumohl says. "Now they're getting worried." And the funny thing about consumers is that when they start to fear a recession -- after, say, watching their stock portfolios grow sickly since July -- they end up creating one. "If people do indeed cut sharply back on spending, it could accelerate any downturn the U.S. has, in both speed and severity," says Baumohl. "Consumer spending accounts for two thirds of all U.S. economic activity." So be warned: If the recession comes, you'll have no one to blame but yourself.
Danger: Closing Wallets
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WASHINGTON: Uncle Sam -- or at least his tenacious economic expansion -- needs YOU. And it looks as if you're letting him down. The Commerce Department reported Tuesday that retail sales rose a minuscule 0.2 percent in August -- a sign that consumer spending, the main underpinning of the U.S. economy's continued strength amid a world of troubles, is slowing down. "The increase barely kept up with inflation," says TIME business reporter Bernard Baumohl. "Clearly, consumers are beginning to pare back their spending."