WASHINGTON -- Chris Swingler, a father of two, worries about losing his job. Harry Kolodzij, a retiree, frets about how to make ends meet.
At a time of economic uncertainty and stock market turmoil, Americans' confidence in the nation's economic well-being is eroding. That is making many consumers -- the economy's lifeblood -- more cautious, a development likely to slow the recovery, analysts say.
''I'm being much more cautious as far as my budget is concerned,'' said Swingler, a mailroom machine operator for Xerox in Washington.
''I got to make sure I have something to the side for hard times. I'm being more observant as far as the future is concerned, just in case,'' he said. ''I see a lot of people losing their jobs. I don't want it to happen to me.''
Spending by consumers accounts for two-thirds of economic activity in the United States, so their behavior and their feelings about the economy are vital to shaping the recovery.
Consumers' confidence took another hit in July, the result of accounting scandals and the sour stock market, economists said.
''When people see a big sell-off in the stock market, it is like a huge cloud of smoke; and people think if there is that much smoke, there must be a fire. Something must be wrong with the economy,'' said Mark Vitner, economist with Wachovia Securities. ''That is making consumers apprehensive and edgy.''
The University of Michigan's consumer sentiment index sank to 88.1 in July, down from 92.4 in June, economists said. Consumers' assessments of current economic conditions changed little over the month, but their feelings about future economic activity changed a lot. That index of consumer expectations dipped to 81 in July from 87.9 in June.
Job worries also weigh on people's minds.
''It's a bit scary every time you turn around you hear something on the news where some company is laying off a boatload of people,'' said Dave Demarti, a real-estate manager from Phoenix. ''You feel a bit tentative and get a little anxiety.''
Employers probably will not be in a rush to rehire, economists said. Some predict the nation's unemployment rate, now at 5.9 percent, could move as high as 6.5 percent by this fall.
''I am pretty nervous about the state of things, and I thank God every day that I have a job,'' said Barb Bucher, who works for a regional transit authority in Denver.
On Tuesday, the Conference Board, a business research group, releases its closely watched Consumer Confidence Index for July. Economists predict the index will tumble to 103, 102, even lower. That would be down from June's 106.4, a four-month low.
''If consumers lose confidence, they will rein in more aggressive spending, and under very uncertain circumstances, they would pack it in,'' said Mark Zandi, chief economist for Economy.com.
The economy fell into recession last year, and if consumers were to clam up entirely, it could hit the skids again, economists say. They do not consider that likely, but neither do they rule it out.
The shock of another major terror attack or a dramatic and prolonged drop in the stock market, which would probably result in a flurry of layoffs, could bring this about, they said.
A more likely outcome, economists said, is that consumers will spend more cautiously, which would make for a sluggish recovery.
Consumer spending in the first three months of the year grew at an annual rate of 3.3 percent. Zandi believes spending in the second quarter and in the current quarter slowed to just more than a 2 percent growth rate but should edge up to 2.5 percent in the final quarter.
Positives for consumer spending are low interest rates, solid appreciation in home values and extra cash from refinancing.
''I'm out there shopping,'' said Rebecca Merbicker of Richardson, Texas, who said she feels good about the economy. But she observed: ''I've noticed the malls have been slower.''
While low interest rates are great for borrowers, they bring measly returns for savers.
''I'm not buying anything that I don't absolutely have to and hoping to be able to last this out,'' said Kolodzij, the retiree from Springfield, Mass. ''These low interest rates don't help us old folks, either. It used to be you could get a little income on the money you had set aside, but now the banks aren't paying hardly anything.''
Economists look to confidence gauges to provide some insight into what consumers might do, but those indicators do not necessarily track each other. Retail sales rose by 1.1 percent in June from May, even as confidence, as measured by the Conference Board, was at a four-month low.
''Our interest is in what people do, not what they say'' they are going to do, Federal Reserve Chairman Alan Greenspan said, discussing the tricky nature of trying to track the mood of consumers.
Consider Stephanie Hatch, a San Diego marketing director, who said she was a little worried about the economy.
''I actually don't see things improving for another year,'' Hatch said as she shopped for clothes at a mall. Yet she said she has not trimmed her spending. ''I know my job's pretty secure,'' she said. ''So, I think I'm doing my part by spending, by helping the economy.''
Retailers are stepping up discounts, free-financing offers and other incentives. That seemed to be helping car sales in July.
Paul Taylor, chief economist for the National Automobile Dealers Association, estimated that the industry sold 16.7 million cars in July, as a seasonally adjusted annual rate. That would be up slightly from June's sales rate of 16.4 million.
''People are kicking the tires more, shopping around more and are more price conscious,'' Taylor said.
''At every level, consumers are becoming more cautious. At the luxury level, which has been hurt the most by the stock slide, people may be willing to pay $70,000 for four seats, but not for two seats,'' he said.
Sarah Thompson, a spokeswoman for the National Retail Federation, said industry sales appear to be up in July from a year ago, helped by summer clearances and promotions.
Retailers are gearing up for the fall. ''A lot of shoppers are focusing on the necessities,'' Thompson said. ''Back to school is necessity driven. ... It's not a frivolous time for shopping, which suits the mood of a lot of consumers right now.''
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