Consumer confidence lowest since 1982
Survey from the University of Michigan says uncertain consumers intend to save their money rather than spend it.
NEW YORK (CNNMoney.com) -- Consumer confidence sank to its lowest level in 26 years, according to a survey published Friday.

The University of Michigan Consumer Confidence survey revealed that high food and fuel prices, coupled with shrinking incomes and falling home values, have driven consumers to save their money rather than spend it.

"The recent acceleration in the loss in confidence indicates a longer and potentially deeper recession," said Richard Curtin, the university's consumer survey research director.

The survey's Index of Consumer Sentiment, a closely watched indicator of the economy's current health, fell to 62.6 in April, a drop of 6.9 points from the previous month and the lowest level since 1982.

The Index of Consumer Expectations, which economists use to help determine the economy's future direction, fell to 53.3 in April, a decline of 6.8 points from the previous month.

According to the survey, only 30% of consumers plan to spend their upcoming tax rebate, while the rest said they would use it to pay off debt or put it into savings.

Though the stimulus rebates, due to start arriving in mailboxes next week, will boost spending temporarily, rising prices for food, gas and other essentials along with worries about income levels could cause consumers to spend less through late 2008 and early 2009, according to Curtin.

The survey said that 90% of consumers believed the economy was in a recession, and 75% believed the economic problems will persist for at least another year.

A third of those surveyed specifically said that they were reigning in spending because of uncertainty about employment and income.