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Soaring gasoline, energy and grocery prices with weakening job prospects have left shoppers gloomier about the economy, sending a key barometer of consumer sentiment to its lowest level in almost 16 years.
The New York-based Conference Board said this week that its Consumer Confidence Index dropped to 57.2.
The May reading marks the fifth straight month of decline and is the lowest since the index registered 54.6 in October 1992 when the economy was coming out of a recession.
The index shows a big problem, since consumer spending now accounts for two-thirds of the USA's economy.
Lynn Franco, Director of The Conference Board Consumer Research Center, said consumers' worries about inflation, fueled by increasing prices at the gas pump, are now at an "all-time high" and are likely to rise further in the months ahead.
She added that based on consumers' outlook on the economy, she believes there's little likelihood of a quick turnaround.
Mark Vitner, senior economist with Wachovia Corporation said "Higher gasoline is of immediate concern. A lot of the extra money is going toward gas and food."
Vitner says he doesn't see consumer sentiment improving until gas prices start receding, which is unlikely.
Investors received mixed news about the housing market. A closely tracked Standard & Poor's/Case-Shiller index showed that housing prices dropped at the sharpest rate in two decades during the first quarter, the housing slump continues to deepen.
There are mounting problems with the nation's truckers, with thousands of independents taking out bankruptcy. Diesel fuel is hitting over $5 a gallon in some parts of the country.
Shoppers with less money to spend on apparel and other non-necessities is leading to depressed sales at apparel stores and other retailers.
Meanwhile, the retail industry is waiting with baited breath on the public receiving their stimulus checks, but many analysts say most of the money will go to food, gasoline, energy and credit card payments.
Major layoffs are expected in the service industry, which mostly relies on the public's disposable income.
Auto manufacturers are quickly laying off employees because the public is not buying gas guzzlers.
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