There were two major pieces of economic data out today, and quite frankly the two of them were both worse than even the most pessimistic economists were expecting. First, the S&P/Case Shiller Index, which is a quarterly measure of the change in house prices in major cities across the country, plunged by 8.9%. This far outdid the 5.4% decline in the previous quarter, which at the time was a record decline. This reading that was released today was a measure of the change in from the beginning of the 4th quarter of 2007 to the end of the year. 
We also got scary numbers on just how negative consumers are about the economy. The Conference Board's reading on consumer confidence plunged to 64.5 in March, from 76.4 in February. This is the lowest level of consumer confidence in five years. Even more scary is the consumers thoughts about the future of the economy. The Conference Board's gauge of expectations dropped to 47.9, the lowest since 1973 during the Watergate scandal. Another interesting tidbit from this report is that the number of those expecting their incomes to rise over the next six months fell to a measly 14.9%, the lowest rating ever.
How can you spin these numbers in a positive way? I honestly don't believe you can. The consumer is what drives the economy and the fact that the confidence level is dropping so precipitously makes the future extremely uncertain. It seems like the consumer is finally being crushed, partly by the plunging house prices that were shown in the Case Shiller Index. Many analysts believe that the Case Shiller Index is likely to see even steeper drops in coming months as the housing market bubble continues to unwind.
The combination of record oil prices and skyrocketing food prices along with the housing market meltdown had to hit the consumer hard, and it has begun to do just that. There were lots of strategists who were starting to buy into the "oil won't hurt consumer spending" talk last year, and they are being proven wrong now. The fact is, less money in the wallet always equals less spending. Wages are certainly not keeping up with price increases and inflationary pressures, and with the job market picture becoming more uncertain by the day there are plenty of reasons for consumers to spend less.
It seems to me that a recession isn't just likely, it's already underway. I certainly hope the Fed stays aggressive and the rate cuts make their way to the consumer and promoting a quick turnaround.
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