Companies already have begun laying off workers because of the slowdown. The unemployment rate edged up from 4.0 percent in December to 4.3 percent in March. Analysts predict the rate will reach 4.6 percent to 4.8 percent by the end of the year. Reflecting that trend was a U.S. Labor Department report Thursday that the number of new people applying for unemployment benefits rose to 408,000 last week, up from 283,000 a year ago. The continuing wave of layoff announcements threatens to undermine consumer confidence, posing a broader threat to the economy.
Consumer spending makes up two-thirds of the U.S. economy.
A major fall-off in spending could cause a recession. Consumer confidence tumbled to 109.2 points this month and is down from a peak of 144.7 points last May, according to the Conference Board , a New York-based business group. The University of Michigan will release its April reading of consumer sentiment today. A run-up in gasoline prices is something that could convert what is a skirting of a recession into what is technically called a recession. Earlier this month, Comerica forecast the likelihood of a recession within the next year at 39 percent.