How long it will take for the current down cycle to reverse is anyone's guess, with some economists predicting a turnaround this summer and others warning that we've yet to see the worst. Concerns are also being raised over the prospect of "stagflation," where productivity retracts as inflation rises.

"Unlike the relatively mild recession of 2001, the recession of 1990-91 resulted in a longer time to recover," says Chris McCarty, director of survey research at the UF Bureau of Economic and Business Research in Gainesville. "This is a likely scenario for the current economy."

Four of the five components making up the UF index fell in April, with the largest decrease seen in perceptions of personal finances over the coming year, down nine points to a record-low 79. Perceptions of US economic conditions over the next 12 months fell six points to 52; perceptions of personal finances now compared with a year ago fell five points to 59, also a record low; and perceptions of economic conditions over the next five years fell four points to 72. However, perceptions about now being a good time to buy big-ticket items rose three points to 67.

McCarty notes that investors are adjusting to write-downs of bad loans made by banks, reducing the book value of assets that are overvalued compared to their market value. He adds that the economic stimulus package, while a welcome relief for many households, probably won't do much to change the economy's course.