It's MORNING EDITION, from NPR News. I'm Steve Inskeep.

Apparently, we're not feeling so great about the economy right now. The latest consumer confidence report plunged to its lowest level in two years. And there's plenty to undermine confidence right now: Slowing growth, high unemployment, debt, political gridlock. That all leads to concern that pessimistic consumers will stop spending and undermine the economic recovery. But the way we feel does not always dictate how much we spend.

NPR's Yuki Noguchi reports.

YUKI NOGUCHI: As the saying goes, when the going gets tough, the tough sometimes still go shopping. Tim Dolan is a freelance photographer whose business has grown in recent years. At a farmer's market in Los Angeles, Dolan says he still funnels money into anything having to do with his 1969 Buick Skylark, which he races every Thursday.

Mr. TIM DOLAN (Freelance Photographer): I wouldn't hold back on that. That's my sport, my hobby, my love, you know, my obsession. So whatever I want, I get.

NOGUCHI: Dolan budgets and tries not to waste money, but he also tries to avoid what he calls a poverty mentality.

Mr. DOLAN: I think, you know, you've got to keep spending. You shouldn't, you know, tighten your purse strings, because then you're going to choke the economy.

NOGUCHI: The Conference Board, a private research firm, said its consumer confidence index stands at less than half what it was before the recession. But consumer spending? It's actually higher than its highest levels four years ago.

Mr. GREG MCBRIDE ( There's traditionally been a big departure between what consumers say and what consumers do with regard to their spending.

NOGUCHI: Greg McBride is senior financial analyst for, a personal finance website. Consumers often talk more about cutting back than they actually do. Then again, McBride says, the post-crisis recovery has left Americans still feeling financially insecure. Companies aren't hiring. People and companies are saving cash. Despite very low interest rates, there's no rush to buy homes. And McBride thinks all this suggests a possible break from the past, that people may actually clamp down on their wallets.

Mr. MCBRIDE: I think there's a risk that the spending is much more closely tied to those consumer confidence levels than what we've seen in the past, particularly given the tightness of credit and the penchant for consumers to pay down existing debt and work on boosting their anemic level of savings.

NOGUCHI: McBride says right now we're barely maintaining our spending levels, and a healthy economy requires new spending every month. Seventy percent of the U.S. economy is driven by that spending.

Mr. MCBRIDE: Even a minor cutback in consumer spending ripples very quickly through the overall economy.

Mr. ERIC GREEN (Publicist): I'm not going to spend money just because I feel like the economy needs me to spend it.

NOGUCHI: Eric Green does public relations for the entertainment industry in L.A. He says he and his wife both maintained jobs through the crisis. But their house has lost value, they don't anticipate big raises, and they have two young children. So, for the first time since college, Green says he's budgeting.

Mr. GREEN: I had to buy a washer the other day, and it was like three months of research to find the best deal and wait for that sale to come, which I've never done before.

NOGUCHI: Green says if more money came in, he'd like to say he'd take the family on vacation. But more realistically, he'd save it for private school tuition.

If people like Green increase their savings, it's hard to see how that turns into the kind of increased spending in coming months that economists say is so critical.

Chris Christopher is an economist, one who is steadily employed by IHS Global Insight. He says the numbers he analyzes every day affect his confidence as a consumer.

Mr. CHRIS CHRISTOPHER (IHS Global Insight): Things do make me nervous.

NOGUCHI: Normally, Christopher says, he replaces his car every four years, which means he's due to swap out his 2007 Cadillac Deville. Instead, he's waiting. And when he does get a new car, it'll be something modest.

Mr. CHRISTOPHER: I'm not going to a Rolls Royce anytime soon.

NOGUCHI: Christopher says he also opts for shorter vacations and hotels with fewer stars. But knowing what he knows about the U.S.'s dependence on consumer spending, he sometimes makes concerted efforts to spend. He might splurge on a haircut, for example, or he tries to shop at local stores and buy domestic products.

It's not for you, it's for the American economy?


NOGUCHI: But until jobs, housing prices and stock portfolios make a full comeback, he says his wallet and his confidence will remain at odds.

Yuki Noguchi, NPR News, Washington.

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