U.S. consumer confidence fell more than forecast in March as Americans' outlook for the economy dropped to the lowest level since Richard Nixon was president.  

The Conference Board's confidence index fell to 64.5, a five-year low, from a revised 76.4 in February, the New York- based research group said today. A report from S&P/Case-Shiller showed home prices in January fell by the most on record.  

Declining stock and property values have unnerved Americans, heightening concern spending will falter. A drop in spending, which accounts for more than two-thirds of the economy, would deepen what economists say is almost certainly the second recession of the decade.  

``Consumers are going to pull back pretty sharply,'' said Carl Riccadonna, an economist at Deutsche Bank Securities Inc. in New York. ``The labor market is starting to deteriorate and income growth is barely keeping pace with inflation. These are all pretty negative omens for what's to come.''  

The Conference Board's gauge of expectations for the next six months slumped to 47.9, the lowest since December 1973, when the Watergate scandal rocked the Nixon administration and an embargo by a group of Arab oil exporters was in effect, the report showed.  

Spending is already taking a hit. Retail sales fell 0.6 percent in February, according to figures from the Commerce Department, the second decline in three months.

Wall Street banks, brokerages and hedge funds may report $460 billion in credit losses from the collapse of the subprime mortgage market, or almost four times the amount already disclosed, according to Goldman Sachs Group Inc. Profits will continue to wane, other analysts said.

Dr. Abdullah Al-Saihati, chairman of Saihati Group, has called for the de-pegging of Saudi riyal from the weakening US dollar, saying it was essential to curb increasing inflation in the Kingdom. 

“De-pegging will solve many problems including inflation,” he said, adding that people have lost confidence in the US dollar.

Bernard Kouchner, the foreign minister of France and a longtime humanitarian, diplomatic and political activist on the international scene, says that whoever succeeds President George W. Bush may restore something of the United States' battered image and standing overseas, but that "the magic is over." . . .

Asked whether the United States could repair the damage it has suffered to its reputation during the Bush presidency and especially since the 2003 U.S.-led invasion of Iraq, Kouchner replied, "It will never be as it was before."

"I think the magic is over," he continued, in what amounted to a sober assessment from one of the strongest supporters in France of the United States.

U.S. military supremacy endures, Kouchner noted, and the new president "will decide what to do - there are many means to re-establish the image." But even that, he predicted, "will take time."

The problem is that lower rates tend to fuel inflation. High rates of inflation coupled with sluggish economic growth and unemployment — coined stagflation — could be our worst nightmare. Sooner or later, the Fed will have to show some restraint, even if it means the economy must endure a temporary slowdown. . . .

Meanwhile, inflationary pressures are growing. Consumer inflation last year hit 4.1 percent, reaching its highest level since 1990. Commodity prices are soaring. The dollar has been falling, pushing up the cost of imported goods. The dollar's decline accelerated after the Fed's interest rate cuts began in September. . . .

In spite of the Fed's creative solutions, even the most aggressive actions at this point may not be enough . . . .  At best, the rate cuts have kept the credit crunch from becoming worse. However, the full effects of the dramatic cuts won't really work their way into the economy for another 18 months.

The state of the economy . . . could well give Democrats a huge advantage — especially, to be blunt about it, with white working-class voters who supported President Bush in 2004. . . .

This collapse in economic confidence has occurred even though the full economic effects of the implosion of the housing market and the freezing of the credit markets have yet to be felt. As more things fall apart, perceptions will only get worse.

All of this should work to the Democrats’ advantage. They can contrast the Clinton boom with the Bush bust; they can make the case that Republican economic ideology, with its fixation on privatization and deregulation, helped get us into this mess.

And John McCain can be ridiculed as a man who has declared on a number of occasions that he doesn’t know much about economics — only to insist, straight-talker that he is, that he never said any such thing.  . . .

And, as the Democrats ponder their choices, they might want to consider which candidate can most convincingly ask: “Are you better off now than you were eight years ago?”