Consumer spending weakens considerably

? Consumer spending, the critical bulwark that has kept the country out of recession, is showing signs of cracking. Retail sales plunged by 0.4 percent last month as consumers handed retailers their worst Christmas in five years. Consumers have been battered by a sinking housing market, rising unemployment and the credit crunch.

The Commerce Department’s sales report Tuesday was just the latest in a string of weaker-than-expected numbers that have economists worried that the current economic expansion, now in its seventh year, could be in danger of faltering.

Analysts said the worry is that all the problems weighing on the economy could prompt consumers – who account for two-thirds of economic activity – to sharply limit or even stop shopping. Already, consumer confidence has slipped significantly amid the oil price spiral and the continuing housing slump. At the same time, some of the nation’s biggest financial institutions have reported billions of dollars in losses stemming from a meltdown in the mortgage market.

“There is certainly enough out there to make people worry,” said David Wyss, chief economist at Standard & Poor’s in New York. “We think we are getting very close to a recession.”