Oooohhh, look out below!

That's the sinking feeling you get watching one consumer survey after another showing that in this brave new world of sniper attacks, sinking stocks, and a possible war with Iraq, people are getting worried.

Surely no one should be surprised at the nasty drop in consumer confidence for the month of October reported by the Conference Board Tuesday.

On Friday we saw that the University of Michigan's consumer sentiment index took a tumble. The ABC/Money Magazine's weekly Consumer Comfort index hit its lowest level since 1994 in late October. Every poll from Gallup to the New York Times has shown Americans increasingly pessimistic about the U.S. economy.

What does it mean? The worry is always that it means people will stop spending.

It's true that we can – and have – seen consumer confidence falling without seeing spending dry up. Over longer periods of time, however, if confidence keeps dropping, spending broadly follows that move.

The latest chain store sales numbers from Mike Niemira over at Bank of Tokyo-Mitsubishi were not good: down 1.9% in late October.

Meanwhile sales for September are expected to be up about 1.5% to 2.0% compared with a year ago. That's pretty anemic.

Another worry is that the drop in confidence is much more than the sniper terror that gripped the nation, even among those far out of the line of fire, and much more than a reaction to the drum beat of war, and the loss of stock market wealth.

What if people are getting less confident because the labor market is getting shakier and they're wondering about their own family's foundation?

After all, there has been a steady move higher in the number of people in the Conference Board survey calling "jobs hard to get." It's up to 27 percent.

As we have heard from economists of all stripes, from Wall Street to Washington, the dark underbelly of increased labor productivity – the increased efficiency of workers due to better technology, better training, and a simple drive to work longer and harder – is that companies can do more with fewer people.

And at a time when many companies have no pricing power, and a lot of international competition, the productivity situation means many are tempted to lay off workers to boost profits.

Good for the individual firm, not good for the firmness of the overall economy.  

Kathleen Hays co-anchors Money & Markets, airing Monday to Friday on CNNfn, and appears throughout the day reporting on the economy and how it affects financial markets.