Most Americans predict long recession

02.16.09
By Nicholas Storie

For years, Americans have spent beyond their means and accumulated credit card debt, while levels of savings have been low.

Now, many people seem to believe these behaviors have driven the country into a prolonged recession that will not be resolved anytime soon.

According to the Reuters/University of Michigan Surveys of Consumers, the confidence index fell from 61.2 in January to 56.2 in February.

This number puts U.S. consumer confidence close to the index's all-time low figure of 51.7, which was measured in May 1980. It is also the lowest reading of the past three months.

Additionally, consumer expectations for the next 12 months fell to a new low of 27, a significant tumble from January's reading of 47.

It seems that many people have become resigned to seeing out a difficult 2009 without a likely turnaround on the horizon.

"Confidence fell in early February as consumers came to the consensus that the economy would remain in recession throughout 2009," the report stated. "Moreover, nearly two-thirds anticipated that the downturn would last five more years."

The news comes after data from the Commerce Department indicated a surprise 1 percent rise in retail sales last month.

However, economic experts say the upward movement probably doesn't mean that consumers will continue to increase spending or have forgotten about their credit card debt.

Sales were still down by 9.7 percent on January 2007, the figures show. And, because the previous two months had seen such significant decreases, the more recent data may only look positive in comparison.

"January's results by no means suggest that the consumer is on the road to recovery," MFR economist Joshua Shapiro wrote to clients, according to the Wall Street Journal.

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Consumer confidence is near a historic low.