Americans seem more resigned to the hardships of the recession as consumer confidence stabilized in March after falling to an all-time low in February.

But economists caution that shoppers -- dealing with shrinking retirement funds, falling home values and worries about job security -- are still very gloomy and any improvement in sentiment is fragile.

"There is a sense that consumers are now familiar (with) how bad things are," said Bernard Baumohl, chief global economist at the Economic Outlook Group. "They have read the papers. They recognize that the job market is awful."

Some glimmers of better economic data of late helped stem further sharp declines in sentiment, which remains the lowest since at least 1967 when the index began. The Consumer Confidence Index issued Tuesday by the New York-based Conference Board edged up to 26.0 in March from a revised 25.3 reading in February. It had fallen from 37.4 in January and is less than half its level of a year ago.

But even as consumer confidence held steady, a widely watched index showed that American home prices dropped by the sharpest annual rate on record in January. The Standard & Poor's/Case-Shiller 20-city housing index tumbled by a record 19 percent from January 2008.

Many people seem to be adjusting to the new harsh realities.

Barbara Fera, 63, a cosmetologist from Warwick, R.I., said she's not "overspending" like she used to -- buying a new jacket or purse whenever she felt like it -- but also says she's not "gonna be doom and gloom."

Fera's 401(k) lost money, but "time will bring that back," she said while shopping for her grandchildren in Rhode Island's Providence Place Mall. "We just have to be patient."

Claude DeAlmeida, 40, of Fall River, Mass., expressed a calm resolve to ride out the downturn. "Every month I feel a little better about it," he said.

An automotive technician with a wife and two girls, he said the family is cutting out extended vacations out of state this year but has made few other changes. He's hoping that by next year, he'll be able to cruise the Caribbean.

Economists closely monitor consumer confidence since consumer spending accounts for more than two-thirds of economic activity. The Conference Board's consumer confidence survey sampled 5,000 U.S. households through March 24.

A few encouraging economic reports, including better-than expected figures on consumer spending and orders for durable goods, helped fuel a stock rally in recent weeks. The Dow Jones industrial average rose 135.96, or 1.8 percent, to 7,657.98 on Tuesday, after a two-day pullback.

The latest positive signs about spending came Tuesday from the International Council of Shopping Centers-Goldman Sachs index. It showed that sales perked up for the week ended Saturday -- though the retail sector has a "long road back," noted the ICSC's chief economist Michael P. Niemira.

"We have a long way to go before consumer confidence would be consistent with an economic recovery," agreed Wachovia economist Mark Vitner.

Even the slight rise in confidence for March, which followed three consecutive monthly drops, came in below expectations. Vitner believes that sentiment may improve this year as the government stimulus program kicks in, but doesn't expect the index to reach a healthy level of about 70 until next year as companies keep laying workers off.

Job security is a major factor behind shoppers' ability and willingness to spend. The U.S. unemployment rate -- now at 8.1 percent, the highest since late 1983 -- is expected to rise to 8.5 percent in March, according to economists surveyed by Thomson Reuters. Many economists expect unemployment to tick up to about 10 percent by the end of the year.

Emily Shaw, a 25-year-old part-time intern at a science company, is struggling to find full-time work. "I've been applying for a while, and I'm just getting more worried about finding a job once my internship is over," said the Salt Lake City resident.

Kevin Mead, a 41-year-old computer system administrator from Dallas, has half a dozen friends who were laid off recently.

"I could get laid off next week. At any time, it could happen," he said.

If that happens, he just hopes that the computer retailer he works for offers him a severance package or that unemployment benefits see him through while he works at odd jobs.

"And hopefully my girlfriend wouldn't get laid off at the same time as me," Mead said.

Associated Press Writers Rette Speight in Salt Lake City, Hilary Russ in Providence, R.I., and Andre Coe in Dallas contributed to this report.