Dina ElBoghdady, Washington Post

Tiffany Harding, a part-time worker at a temporary placement firm, is a distressed consumer. Not distressed enough to skip a week-long vacation at Walt Disney World this month. But enough to hold off on buying a computer anytime soon. Not enough to stop her from purchasing a pair of jeans. But enough to postpone signing up for cable TV in her bedroom. "I watch the news and I watch the war and I watch the loopy-loop stock market, and it makes me nervous," the 23-year-old Clinton resident said from her table outside a downtown Washington Starbucks. "It makes me think, 'Maybe it's not too wise to spend now.' "

In a sense, all eyes are on the Tiffanys of this nation. Economists are crunching reams of data to figure out which way she will turn. Will she really hold off on buying that computer? Or is she just saying that? And if so, for how long? Because consumer spending accounts for two-thirds of the U.S. economy, the answers from Tiffany and millions of other Americans have a serious bearing on the country's economic recovery.

Each month, consumers offer insights into their thinking, and more important, their spending. Somehow, these clues seem more important in down times than up. Some of the discouraging signs: The consumer confidence index compiled by the Conference Board, an independent business research group, fell this month to 62.5, the lowest level in almost 10 years. Overall consumer spending was flat while retail sales slipped 1.6 percent in February, the Commerce Department reported. And payroll employment fell by more than 300,000 last month. On the bright side: Interest rates and inflation remain low. Personal income rose 0.3 percent in February, the seventh increase in a row. And after-tax personal income, adjusted for inflation, rose 2.2 percent over the past 12 months.

Take a look at these numbers and the only thing that's clear is that consumers are playing a game of tug of war, said Erik Gordon, a marketing professor at the University of Florida. Pulling in one direction is the desire to carry on life as normal, Gordon said. And tugging in the other direction is uncertainty. Terrorist attacks. A volatile stock market. Code orange. Friends who have lost their jobs. Financial scandals. Retirement accounts that are not much more than memories. Talk of war. Then war. These are the seeds of unease. "A body of psychological literature suggests that uncertainty makes us hesitate to make a choice," Gordon said. "It makes us delay our spending."

For two years, consumers have kept the economy afloat, defying the typical patterns of recession. Typical is what has happened in nine of the nation's 10 recessions since World War II: Consumers react to the crisis by tightening their purse strings; business follows suit by delaying investment in buildings and equipment. In all the post-World War II recessions (except the one that began in March 2001) consumer spending declined. When Iraq invaded Kuwait in 1990, spending dropped 0.8 percent. Economists generally agree that the drop is what caused the recession that year. But the most recent recession turned that pattern on its head. After the dot-com bust unraveled the stock market, business spending nose-dived. Companies had been spending furiously, not necessarily on productive improvements but defensively, making sure their systems could handle the transition from the 1900s to the 2000s (remember the Y2K fears?). Those conversions left them with excess equipment. The dot-com bust left them with less market value. And businesses that wanted to spend had a harder time as capital dried up. But consumers kept digging into their pockets. Real personal consumption expenditures grew by 2.5 percent in 2001 and more than 3 percent in 2002. "We never saw the consumer bail in this business cycle the way we have seen it in every other downturn," said Carl E. Steidtmann, chief economist at Deloitte Research. "That's at the heart of why this has been the mildest recession on record."

Even the Sept. 11, 2001, terrorist attacks did not derail consumers for long. Soon after, they went on a buying binge that lifted the economy from the depths of recession and seemed to pave the way for recovery. But businesses didn't get the message and stayed on the sidelines. And now, Jack Guynn, president of the Atlanta Federal Reserve Bank, said recently that as long as the possibility of a protracted war looms, "the prospects for the economy will probably be left more or less to the bloodied but unbowed U.S. consumer." The problem is consumers are notoriously quirky. To assume that they know what they want and that they adjust their spending accordingly would be foolish, said Dan Ariely, a business professor and behavioral economist at the Massachusetts Institute of Technology. "Consumers do not look at a $ 5 cup of coffee and say, 'What effect will this have on my retirement and my kids' inheritance?' " Ariely said. "They are not rational agents." One reason for that behavior is that consumers, unlike businesses, often can't pinpoint their bottom line. Is it their savings account? Checking account? Retirement plan? "It's fuzzy," Ariely said. War does not clear up the fuzziness. Sometimes it exacerbates it. The result is a headache for retailers. In times of crisis, retailers often bemoan the "CNN effect" -- the consumer's tendency to abandon shopping and sit home watching events unfold on television. Of course, this is when retailers aren't blaming bad sales on the heat, the cold, the snow or Seventh Avenue's lackluster fashion offerings. The CNN phenomenon usually gives way to a flurry of spending once the shock wears off, as it did soon after 9/11, several economists said. Because there was a long buildup toward the current war, they said, the shock phase, if it even exists, should wear off quickly, barring a domestic attack or massive loss of American lives abroad.

To find out what this means for future spending, look to the past. If inflation and interest rates remain low and unemployment does not rise, consumers will do what they've always done even if war continues, Ariely said. "They are creatures of habit," Ariely said. "People look at what they did last year and keep doing it, with minor adjustments." Camilla Miree, a staff assistant at a Washington trade group, is one of those people. Miree, 29, began tinkering around the edges of her budget when talk of war put upward pressure on gasoline prices. Gone is "frivolous spending" on the extra box of cereal that her two sons latch on to in the supermarket. Gone, too, are the family's regular breakfast visits to McDonald's. But Miree said she's not overly concerned about the war. Or gas prices for that matter. "I plan to buy an SUV" this spring, she said. Weighing most heavily on her mind is her job security. "I work for private industry, not the government," said Miree, who lives in Greenbelt. "They can walk up to you tomorrow and say, 'It's been nice working with you. . . . ' "

Many polls suggest most Americans share Miree's concerns. About a third of Americans said the war would have a major effect on their spending and another third said it would have some effect, according to a survey this month by RoperASW. But when asked what most worried them, they ranked the economy and their jobs higher than war and personal safety. "They did not connect the economy and their jobs with the war," said Edward B. Keller, chief executive of Roper. "But all these factors interact to reinforce anxiety."

But pocketbooks don't always snap shut when anxiety sets in. Not even at the height of the Depression, when 86,000 businesses and 5,000 banks failed overnight and a third of the population had no income whatsoever, said Laura Hillenbrand, author of the best-selling "Seabiscuit: An American Legend," the story of the 1930s racehorse. "It was at a time of such anguish that escapism became a major cultural force," Hillenbrand said from her Northwest Washington house. "One of the major ways people escaped in the 1930s was to go to the horse races." It was during that era that bowling took off and that movies became the enormous industry they are today, with 85 million of the nation's 125 million people visiting magnificent movie palaces each week for a dime, she said. Movies are still an escape, said John Fithian, president of the National Association of Theatre Owners in North Hollywood, Calif. After 9/11, ticket sales fell off for about five days -- and then the industry entered one of its strongest periods, Fithian said. The next 10 weeks were record weeks compared with the same period of the previous year. Last year, with all its immense geopolitical and economic challenges, was the strongest year for movie attendance since 1957, Fithian said. About 1.64 billion tickets were sold. That's why theater owners are not too worried about the drop-off in movie attendance last weekend.

Some of the same elements are at play in the restaurant industry. Since 1973, there hasn't been a year when money passing through restaurant cash registers was less than the year before, said Dennis Lombardi, executive vice president of Technomic Inc., a consulting firm in Chicago. That's not to say that profits didn't suffer, he said. When recession hits, restaurants price themselves competitively to attract traffic. "But for the consumer, it's a small indulgence," Lombardi said. "It brings normalcy and respite without busting the budget." Perhaps the only difference might be their choice of dining locations since the terrorist attacks, said Roger Berkowitz, president of the Legal Sea Foods restaurant chain. "I'm seeing that my suburban restaurants have picked up" by about 10 percent, probably because customers want to stay close to home, Berkowitz said.

So how can it be that consumers continue to spend even though confidence has hit historic lows? Because consumer spending is what consumers do and consumer confidence is what they say, said Christopher J. Brightman, chief investment officer at Strategic Investment Group, an investment-management firm in Arlington. And what they do is in large part driven by low interest rates, which have allowed consumers to refinance their old mortgages, take out home-equity loans and generally profit from their real estate assets without selling them. "The 8,000-pound gorilla with consumer spending is the interest rates," Brightman said. "The war is real and significant, but it's highly exaggerated."

Then there's the job market. The unemployment rate has hovered around 6 percent for the past year. That's among the lowest rates in history for a period of weak growth immediately after a recession. But it is substantially higher than the 3.9 percent low in October 2000, said Lynn Franco, director of the Conference Board's Consumer Research Center. "To the consumer, it does feel like we've deteriorated," Franco said. "Part of it is perception, based on where we were and where we are today." But if people still have their jobs, their ability to spend money is not restrained, said L. Douglas Lee, president of Economics From Washington. "In that case, the levels of confidence don't tell us much about consumer spending," Lee said. Just ask Peggy Tighe, a lobbyist. She's got the job, the house and the low interest rates going for her. Tighe, 36, bought a ranch house with her husband, Steve, in Arlington "before the market went insane." The couple ripped out the four walls and the ceiling and added half a floor. "We'll refinance for a second time, pay off some bills with money from the refinancing and then we'll take our time and furnish it," Tighe said. As for war, she said, "I'm not worried."

Staff writer John M. Berry and researcher Richard S. Drezen contributed to this report.