|Consumer confidence has dropped to the lowest level in 16 years, raising further fears of a recession.|
Consumers had the weakest spending performance in 17 months in February, with spending continuing to be flat.
Analysts said the performance was not surprising given all the problems battering households.
"Food and energy prices are climbing ever higher, the labor market is slowing, credit is becoming tighter and household wealth is declining as house prices drop," said Nigel Gault, senior U.S. economist at Global Insight.
"Consumers are facing bad news on all fronts," he said.
The concern is that all these problems will cause consumer spending to drop, which accounts for two-thirds of total economic activity.
The American economy sustains itself on what American's spend, no longer what America produces.
Mark Zandi, chief economist at Moody's Economy.com. said "We are losing jobs, the stock market is down, house prices are crumbling, gasoline prices have hit new record highs and it costs a lot more to buy a loaf of bread. Nothing is going well."
Zandi said he still believes a recession, if declared, will be ending this summer when 130 million households start spending their rebate checks from the $168 billion economic stimulus package.