NO MATTER how long one has been in the media business, it remains a puzzle. (OK, it must be even worse for the readers.) Exactly why and in what way stories develop is a bit of a mystery, even to those who present them.

Take the housing market, on which a million words must have been written and broadcast. They are still being produced, but not in the way one might have expected before the wheels came off the property market.

The estate agents' advertisements now look like Dunnes Stores in the week after Christmas, with the old prices scored out and the new, cheaper ones, trumpeted. One reduction in a popular Dublin suburb amounted to 23 per cent, or €90,000 in ready money. Another builder is guaranteeing to buy property back at the selling price any time in the next five years.

But none of this seems to be creating the sensation one might have expected if such a thing had been suggested during the boom. In fact it was suggested -- in a famous RTE programme -- and caused a huge sensation then, even though it hadn't happened.

Consider also the cries of lamentation at the time of the general election about all the people who could not afford to buy a home of their own. Most of them still can't, but everyone seems to have gone very quiet about it.

My guess is that the lamentations were not so much about inability to get a roof over the heads, as inability to get on to the famous "property ladder", at a time when those who were on it appeared to be making effortless riches. Now, the ladder looks a much less interesting implement. Does one want to be on it all? And anyway, why rush?

Because this is not really a piece about the property market. It is about psychology, of which the property market is the most obvious example, but far from the only one. Similar attitudes of surly acceptance and aversion to new risk can be seen on stock markets. The big question, however, is not investor mood, but the psychology of the consumer.

The two can be related, of course. Studies by august bodies like the OECD and the IMF find that Irish consumers did not fund much of their spending from the rising value of their houses; certainly not as compared with Britain or America. But reverse psychology might still cause them to cut back on spending a bit, just because the value of their property is less than it was.

This may be even more of a risk where people have invested in property. Even if they can meet the mortgage repayments, the property no longer offers quite the same hope of future wealth. It does not help that their pension prospects may also look pretty ragged. Such folk could decide that they ought to save a bit more to compensate, and so cut back on personal spending.

Will they be joined by the great mass of consumers, most of whom are not exposed to shares or property, and the vast majority of whose jobs are not at risk? This is the €140bn question, since that it is the amount of annual personal consumption.

It represents two-thirds of economic activity, and probably rather more in terms of employment, with the rest of the economy consisting mainly of exports and investment. There is a general consensus now that house-building will fall by 50 per cent this year, and commercial construction by a fair whack next year. But last week one economist decided the consumer would crack as well. The effect was dramatic.

Goodbody Stockbrokers cut their estimate for consumer spending growth this year to just 1.6 per cent in real terms. That compares with forecasts of 4 per cent in the last analysis from Bank of Ireland, 3 per cent from the Economic and Social Research Institute (ESRI), and a figure between the two from the Central Bank.

The result of Goodbody's view that the consumer's nerve will crack is to leave the economy growing by a paltry 0.8 per cent in 2008, using the measure of GNP. That would be the worst performance since the dark days of the mid-1980s crisis.

This prognosis is based largely on limited data on weak car sales and a fall in credit card spending. Surveys of consumer confidence do not yet point to anything quite so drastic. But even if what people say in surveys is a good guide to what they will actually do, how long can their mood withstand the torrent of bad news from home and abroad?

- Brendan Keenan