Is the Long-Awaited Consumer Slowdown Beginning?

It appears that the consumer is beginning to falter in the face of the housing market, higher oil prices, etc. Is this the beginning of the long-anticipated economic slowdown/recession. Text in bold is my emphasis. From Market Watch:

Consumers are worried and getting more worried.

Their view on current economic conditions has been lower only once during the past 15 years -- when the United States invaded Iraq in 2003, according to a survey released Friday by Reuters and the University of Michigan.

"Sentiment readings are now out of the caution area and into the DANGER zone," wrote Robert Brusca, chief economist at Fact and Opinion Economics. "Things do seem to be unraveling a bit faster."

The current economic conditions index fell to 91.0 in November from 97.6 in October.

Overall sentiment is at its lowest since widespread worries about oil prices after Hurricane Katrina. This month's reading is at 75.0, below Wall Street's expectations of 79.5 and the prior month's reading of 80.9.

The sliding consumer sentiment readings in recent months "is not untypical of the pattern seen when the economy is entering recession," wrote John Ryding, chief U.S. economist for Bear Stearns.

"However, such a move down in confidence is usually corroborated by a sharp move up in jobless claims and, thus far, claims remain very subdued, providing no confirmation of the message from consumer sentiment," he wrote. "The decline in confidence in November was concentrated amongst low income households and appeared to be largely the product of rising gasoline prices and falling home prices."

In fact, on Thursday, some economists noted that the latest weekly jobless claims indicate that the labor market is holding up, despite turmoil in the credit and housing markets. The number of U.S. residents filing for unemployment benefits decreased by 13,000 last week to stand at 317,000, the lowest level in a month. Economists say initial claims in the range of about 300,000 to 325,000 are consistent with healthy job growth, while consistent levels over 350,000 would signal significant weakening in the labor market.

The consumer expectations index for November reached 64.7 -- also the lowest level following Hurricane Katrina -- down from 70.1 in October.

Ian Shepherdson, chief U.S. economist with High Frequency Economics, wrote that the expectations index "is more worrying now because we can see no reason why it should improve" soon.

He added that confidence is much more likely to continue to slide than recover.

"The timing of this plunge in sentiment, coming just before the holidays, could not be worse," he wrote. "This is the time of year when retailers make their money, but the holiday season is shaping up to be a disaster."

On the other hand, U.S. retailers on Thursday reported their worst October sales in 12 years, hurt by unseasonably warm weather, record high oil prices, and consumer worries about the housing and credit markets