NEW YORK (CNN/Money) - The Kansas City Royals' confidence problems this year pale in comparison to what's going on in the economy. A steady stream of falling stock prices and new allegations of corporate misbehavior has worn away at the hope for quick economic rebound consumers, investors and businesses shared earlier this year.

The danger now is that negativity may have begun to feed back into the economy itself. Companies pulled back sharply in July, cutting back on orders. Outside of auto sales, where generous financing terms helped lure people to car lots, consumer spending idled. In another sign of worry, the ABC News/Money magazine Consumer Comfort index slipped to its lowest level in six years Tuesday. If businesses and consumers are tight-fisted with their money in the months to come, the return to recession they worry about could become a self-fulfilling prophecy.

If only it was so easy

It would be nice if somebody could wave a magic wand and turned sentiment around, but who that could be is unclear. The Bush administration has been trying, most recently at its economic forum in Waco, Texas, on Tuesday, but the response has been underwhelming. The corporate chieftans whose pronouncements people used to put so much faith in have turned out to have feet of clay. Even Alan Greenspan, once dubbed Maestro, doesn't carry the respect he used to command -- The New York Times recently quoted Sun Microsystems CEO Scott McNealy comparing the Fed Chairman to Chauncey Gardiner, the simple-minded character played by Peter Sellers in Being There whom the powerful duped themselves into considering brilliant.

"Clearly Greenspan's luster has dimmed, and there's this worry that he's fired a lot of bullets and the bullets he has left won't do any good," said Deutsche Bank chief U.S. economist Cary Leahey.

After 11 Fed cuts last year, the fed-funds target rate sits at 1.75 percent, its lowest level in 40 years. While these lower rates have sparked mortgage refinancing activity, helping keep the consumer in the game, they haven't done much to cheer businesses.

"Rates have already gone down so much," said Julius Baer head of U.S. equities Brett Gallagher. "Going from 1.75 percent to 1.25 percent isn't going to encourage companies to go out and spend."

What a cut could do is shore up the stock market which, in turn, would cheer up CEO's. A rally would also make it easier for companies to raise cash in both the equity and corporate bond markets.

But investor faith in both Greenspan and the government isn't what it was in 1998 when, on the heels of the Russian debt crisis the Fed cut three times and then-Treasury Secretary Robert Rubin moved to shore up confidence in the market. At the end of the year, both Greenspan and Rubin were being celebrated as heroes.

"Rubin was a great Treasury Secretary," said Lehman Brothers economist Ethan Harris. "Nobody in the Bush administration comes close."

Or maybe Rubin was just lucky. At a time of incredible prosperity, people thought he could do no wrong. Ditto Greenspan. That meant when a crisis of confidence arose both men were well-positioned to deal with it. And today maybe the situation has reversed itself -- the economy is on the rocks and people figure the policy makers aren't on the ball.

When it comes to restoring confidence, whether the administration and the Fed really are clueless when it comes to economic policy or are just perceived as clueless, the result is the same -- their ability to help jump-start the economy has been curtailed.

"You're not going to turn this thing around with platitudes," said Deutsche Asset Management economist Josh Feinman. "There are no magic bullets."