Consumer Confidence Tumbles

News flash: A new study has found a stunning link between consumer confidence and the amount of money that people earn. "U.S. consumer confidence fell in February to the lowest in 10 months, as consumers' short-term outlook on jobs worsened," Reuters reported, citing a report by The Conference Board, a business group.

The index, which rose in January, plunged 10.5 percentage points in February, to 46 from 56.5 percent. It is the lowest reading in 27 years, which is pretty shocking considering that the U.S. economy is supposed to be in the middle of a recovery. Lynn Franco, director of The Conference Board Consumer Research Center, said "Consumer Confidence, which had been improving over the past few months, declined sharply in February. Concerns about current business conditions and the job market pushed the Present Situation Index down." A separate report today showed that unadjusted housing prices in 20 key cities fell. And regulators have found a 27 percent increase in the number of problem banks.

It's disturbing that the economy is slowing down now because key parts of the government stimulus program are slated to expire in March. A wave of sovereign defaults, beginning with Greece, is a matter of increasing concern. A double-dip recession isn't inevitable, but the odds seem to be rising.