Cowed by the financial crisis, American consumers are pulling back on their spending, all but guaranteeing that the economic situation will get worse before it gets better.

In response to the falling value of their homes and high gasoline prices, Americans have become more frugal all year. But in recent weeks, consumers appear to have cut back sharply.

It's still unclear how quickly financial institutions will be able to hand bad mortgage debt to the U.S. government under the bailout approved last week and convince the markets they are healthy again.

Doug Roberts, chief investment strategist at ChannelCapital-- Research.com, said bringing lasting calm to credit markets and financial institutions will take longer to work out than many observers predict.

Recent figures from companies, and interviews across the U.S., show automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores -- and even gamblers are cutting back.

When the final tally is in, consumer spending for the quarter just ended will almost certainly shrink, the first quarterly decline in nearly two decades. Many economists warn that a consumer-led recession could be more severe than the relatively mild one earlier this decade.

"The last few days have devastated the American consumer," said Walter Loeb, president of Loeb Associates, a consultancy, who said he worried that the constant drumbeat of negative news about the economy was becoming a self-fulfilling prophecy. "They all feel poor."

Household net worth, which greases spending, fell $6 trillion over the last year, with $1 trillion of that in just the last four weeks, said Mark Zandi, chief economist at Moody's Economy.com.

Less than a month ago, Nigel Gault, chief domestic economist at Global Insight, a forecasting service, predicted that domestic economic output would rise by 1.2 percent in the third quarter. "At the moment I'm running close to zero," he said, "and maybe a negative."

For some Americans, the pain is already acute: Jobs disappeared at a faster clip in September. For many others, day-to-day finances are fine for now, but the financial outlook is uncertain: 401(k) accounts are dwindling, loans are hard to get and house prices continue to fall.

Claudia Prindiville, a 41-year-old mother of three shopping near Chicago, is among those feeling anxious. Shopping at a Talbots store, she said her own family's finances had not yet suffered. Still, she pulled out a coupon to buy a two-piece sweatsuit, and at The Children's Place she bought pants and shirts from the sale rack.

"All the talk about how bad it is out there has started getting in my head," she said. "I still need to shop for my kids' school clothes, but I am definitely buying less for myself."

Consumer spending, which accounts for nearly two-thirds of the economy, grew modestly earlier in the year but fell in July and August on an annualized rate. When the government releases quarterly numbers later this month, they are expected to show that consumer spending shrank 3 percent or more.