But consumer sentiment is more closely tied to the stock market now more than ever before. More consumers these days are also investors, and when the stock market plunges, so does consumer confidence. Combine this with an increasing number of layoffs, and consumers will continue to become more pessimistic.

And, consumer confidence levels have become a good indication of future stock market performance. Usually, if consumer sentiment makes a firm recovery, it's a sign that the stock market will begin the recovery process in about six months. That's because consumer spending accounts for approximately two-thirds of all spending in the economy. If consumer confidence is up, spending is up -- and that's good news for the economy. But if consumer confidence is down and spending drops -- the economy is going to find it harder to pull out of the doldrums.