The numbers say the economy is still growing, albeit slowly. Sarah Joyal's pocketbook says otherwise.

Joyal, a home health nurse from El Dorado Hills, makes $100,000 a year, but her savings are minimal and her retirement plan is doing poorly. Squeezed by rising gas and food prices, she started packing a lunch, cut back on movies and restaurant meals, even postponed her two Yorkshire terriers' shots, saving $300.

"I feel like I'm struggling," she said.

The economy's struggling, but it's hard to say just how much. Last week the government said economic output grew at an annual rate of 1.9 percent in the second quarter, suggesting the nation has still avoided a recession.

But a day later the government reported that unemployment had risen to 5.7 percent nationwide. Payrolls fell for the seventh straight month. Some economists say the recession is here.

Recession, no recession: Amid the confusion, one thing is clear. As more Americans share Joyal's outlook, things are likely to worsen.

"If the consumer cuts back … because they feel less wealthy, that will spread the recession much more," said Stephen Levy, director of the Center for Continuing Study of the California Economy.

The cutbacks have already started. Californians – spooked by negative economic news and the tens of billions of dollars they've lost to rising gas prices and disappearing home equity – are ratcheting down their spending. It's true even for those who've avoided foreclosure or a pink slip.

Tim Einer, a software trainer in Lincoln, considers himself upper middle class but has seen his home equity fall by $225,000. He traded his Jaguar for a fuel-efficient Chevy, scrapped a European vacation and stocks up at Target whenever possible.

"I have worries all the time – you just see how the economy is," Einer said. "I don't think any of us are guaranteed anything anymore."

Sacramento, home to one of the nation's worst foreclosure rates, has the added burden of a state budget crisis. State payrolls are falling, driving area unemployment to 6.8 percent. Gov. Arnold Schwarzenegger's directive to lay off 10,300 part-time and temporary workers, and cut most full-timers to minimum wage, raised anxiety even more.

"When I heard it, I thought, 'That's going to affect me,' " said Mona Clevenger, who owns a Sacramento gift shop called Gatherings.

Already her business is down nearly 20 percent this year. She had to persuade vendors to stretch out inventory payments.

Part of her frustration: Clevenger knows things are bad but believes media reports are putting extra fear into consumers. "Not everybody's getting foreclosed," she said.

Woe to any public figure who tries to downplay the problem. With polls showing the economy is the No. 1 issue in the presidential race, presumptive Republican nominee John McCain dumped adviser Phil Gramm, a former Texas senator, after Gramm said America had become "a nation of whiners" about the economy.

To a certain extent, Gramm had a point. A recession is traditionally defined as two straight quarters of shrinking output, which hasn't happened yet (although some experts define a recession more loosely). Even in hard-hit California, the job loss has totaled just 40,000 since last year vs. 200,000 in the 2001 recession. Outside of construction, finance and real estate, layoffs have been minimal.

At the high end, it's largely business as usual. George Grinzewitsch Jr., head of Mercedes-Benz of El Dorado Hills, has seen a dip in new-car sales, but he's building an $18 million dealership in Rocklin and will break ground on a Fairfield showroom this fall.

Fountains at Roseville, a new shopping center featuring exclusive retailers like kitchen-accessories merchant Sur La Table, is doing better than expected.

"People are still spending money," said Fountains developer Peter Bollinger. "There's a lot of reason to complain, but consumers are still out there."

Yet many are genuinely suffering, to at least some degree. The nation's household wealth fell by $2.23 trillion, or nearly 4 percent, during the six months ending March 31, according to the Federal Reserve.

Call The Bee's Dale Kasler, (916) 321-1066.