"Three big factors ... will determine what consumers do in coming months. First and foremost is the job market. That's really where consumers get their feeling of the economy. And to the extent that the job market is strong, that's better not only for consumer attitudes but also for consumer spending. Unfortunately many economists think the job market is going to slow, so that should give us some concern about consumer spending in upcoming months.

"The second factor is the stock market. To the extent that the stock market rises, that puts gains, money, literally in consumers' pockets. The stock market has been bouncing around a lot recently, but if it does get in an upward trajectory, that'll be good for consumer spending. If, on the other hand, it goes down, that'll be bad.

"And then thirdly right now, and this is specific I think to this cycle, is the housing market. In the past four years a significant part of consumer spending has been financed by folks going into the value of their homes, drawing out equity and spending that money. And clearly now with the housing market slowing, with in many markets housing prices either stalled or perhaps going down, that's taken away that source of spendable income.

"I think the best bet will be that we will see consumer spending slow in coming months, but it is not going to fall off the cliff," he concludes. "We are going to have a slow period for about six to nine months before a rebound."