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In a recent article entitled, "Consumers Signal Recession Coming," we highlighted the deteriorating trend of the Bloomberg Consumer Comfort Index over the past several weeks. We noted that it stood in contrast to the rise of the Reuters/University of Michigan Consumer Sentiment trend, but that deterioration could be confirmed by the Conference Board's Consumer Confidence Index which was pending at the time.

Indeed our forecast was fulfilled, as the Confidence Index was reported Tuesday significantly lower for the month of May. The funny thing is that professional economists failed completely to foresee what was developing, as I suppose they relied on the University of Michigan data for guidance while ignoring events around financial markets and news about Europe. Bloomberg pegged the poorly conceived economists' consensus for May at an index measure of 69.7, which was above the downwardly revised April figure of 68.7 (adjusted from 69.2 at initial report). Rather, May's index actually fell sharply to a mark of 64.9, a surprise to most, save those following this column.

What I found most interesting about the latest confidence decline was what fueled it. Over recent times, I have noted that consumer expectations have varied at a greater degree than the swing of the consumer view of the current environment. However, May's report offered a different message than usual, and one that I found a bit more concerning as well. The component of the index that measures the American consumer view of the future, or the Expectations Index, declined to 77.6, from 80.4 in April, whereas the Present Situation Index fell dramatically to 45.9, from 51.2.

Consumer spending is less likely to be correlated with consumer confidence when the consumer view for the future is skewed lower. However, when consumers are concerned about the near-term, it will more likely affect their real spending. It seems to me that the latest decline is matched with investor concern regarding the possibility of Greece falling out of the euro-zone and its fantastic repercussions. Recent polls seem to support Greek interests in ending austerity, but we recently wrote that this may not mean Greece will exit the euro-zone. Rather, Greeks may be successfully calling Europe's bluff.

Still, the ambiguity of the situation, especially given the hard-line generally heard from Northern Europe, offers good enough reason for American concern. If I said it a thousand times it was not enough; 20% of American exports are destined for Europe, which is already impacting the American, Chinese and the global economies. If Europe disintegrates, things will mostly get worse for the rest of us. Already, Italian bond yields have widened to beyond 6%, and the rating agencies, Moody's (NYSE: MCO) and Standard & Poor's (NYSE: MHP), are actively preparing for the worst, cutting the debt ratings of Spanish banks while very likely considering other changes. We've already seen signs of economic impact here at home in manufacturing, consumer activity and other segments of the economy.

This report shows consumers see business and job opportunity deteriorated this month, while expecting worse over the next six months. And yet, if the European situation somehow sorts itself out, the stock market should find some life and consumer confidence should recover with it. A great deal hangs in the balance over the next month, for all of us. Thus, the SPDR S&P 500 (NYSE: SPY) dropped 1.4% again Wednesday, while the PowerShares QQQ (NASDAQ: QQQ) fell 0.8% and the SPDR Dow Jones Industrial Average (NYSE: DIA) dropped 1.3%. More closely tied to consumer activity, the Consumer Discretionary Select Sector SPDR (NYSE: XLY) fell 1.6%, and the SPDR S&P Retail (NYSE: XRT) collapsed 1.9%. The shares of major retailers Amazon.com (NASDAQ: AMZN) and Wal-Mart (NYSE: WMT) fell 2.6% and 0.4%, respectively.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.