consumer confidence as chicken or egg?

From the wire services as published in the C-J...

Americans are gloomier about the economy that at any point since just before the U.S. invasion of Iraq, as slumping housing prices and soaring fuel costs have depressed consumer confidence to its lowest level in five years.

The Conference Board, a business-backed research group, said yesterday that its Consumer Confidence Index plunged to 64.5 in March from a revised 76.4 in February.

The March reading was far below the 73.0 that was expected by analysts surveyed by Thomson/IFR and was the worst reading since 61.4 in March 2003.

Declining consumer confidence foreshadows weakening spending, which could hurt the already faltering economy....

One of the interesting things here is that all of the hullabaloo over the "macro stimulus package" may have dramatically lowered consumer confidence-- as a self-fulfilling prophecy. Note, in the figure below, how things got so much worse as Bush and his Congress began to address the economy.