Consumers' Rational Pessimism

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NEW YORK: Alan Greenspan just got another reason to cut rates. American consumers are closing their wallets at an alarming pace, reported the Conference Board on Tuesday; its index of consumer confidence fell 7.1 points to 126, the biggest monthly drop since January and the third in a row since the index hit a 29-year high in June. And since those same consumers account for a whopping two thirds of all U.S. economic activity -- blame that on the flood of exports from moribund Asian economies -- if Ma and Pa shopper fear a recession, it will come.

"A seven-point drop raises a real yellow flag," says TIME business reporter Bernard Baumohl. "The economy depends on consumer spending, and it's clearly starting to slow down. If it continues, it will bring us to the point of recession." Tuesday's rate-cut nudge from Greenspan probably won't be enough to help, unless the Dow reacts by perking up over the next few days. But really, folks, it's up to you now. The last seven and a half years of expansion have been good for all of us -- try not to spoil it.