Mixed Signals Keep your business alive in an unpredictable economy.

Words like variable and mixed are usually used todescribe the weather. These days, they can also be used to describethe U.S. economy.

While the economy keeps growing overall, the combination ofrising gas prices, a static job market and a potential housingbubble has left the U.S. consumer somewhat pessimistic. Consumerconfidence fell for the fifth straight month in May--the longestconsecutive decline since 2002. The Conference Board's"Consumer Confidence Index," a monthly survey of 5,000U.S. households, tumbled 6.3 points between March and April alone.While the most recent figures from the survey indicate thatconsumer confidence may be on the rise--the index rose more than 2points between May and June--entrepreneurs aren't out of thewoods yet.

Americans aren't expecting the economy to derail, but theydo expect more of the same, says Lynn Franco, director of TheConference Board's Consumer Research Center in New York City."We're getting mixed signals," Franco says."There's been economic improvement, but it hasn't beensteady."

Mixed signals are no laughing matter for Chris Mazzilli,co-founder of Gotham Comedy Club, a 9-year-old comedy club in NewYork City with 35 employees and annual sales in excess of $1million. The company offers comedy packages to corporations, andMazzilli, 40, sees more moodiness and less consistency in hiscustomers' buying habits. "They'll say, 'Ican't do what I did last year,'" he says.

Patrick Calello is the founder of Automoblox, aRoseland, New Jersey, company that makes wooden toy car kits thatretail for $32 at FAO Schwartz, Neiman Marcus and specialty toyretailers. Company sales this year will reach about $1 million. Toconvince hesitant buyers, Calello, 34, peppers them withAutomoblox's success stories, offers them customer referralsand gives demos. "We feel confident their experience with theproduct will be positive," he says.

Entrepreneurs must stay confident if they want it to rub off onconsumers, says Craig Stokely, founder of The Stokely Partnership,a Wayne, Illinois, marketing and research consulting firmspecializing in business growth. Entrepreneurs should have a strongstrategic plan, survey their customers regularly and listencarefully for signs of sagging confidence. "Consumerconfidence will continue to go up and down," Stokely advises."The smart entrepreneur takes steps to deal with it."

Entrepreneurs will need a stiff upper lip: Sam's Clubsurveyed 1,200 small-business owners in April and found only 45percent felt confident the economy would get stronger byNovember--a seven-point drop from the same survey last year.