Superstar money manager Mario Gabelli says the U.S. consumer sector is dead in the water, with ominous implications for the economy and stock market.

Real personal consumption expenditures dropped 0.4 percent in July, the biggest drop in four years. July represented the fifth month out of the last 10 that real consumption fell.

Many analysts have said that growth abroad, particularly in emerging markets, will be strong enough to counteract the downturn in consumer spending. But Gabelli, who oversees $28 billion as chief executive of Gamco Investors, disagrees.

"The U.S. consumer is greater than China, Russia, India and Brazil in terms of the impact," he told Bloomberg TV.

"As we're slowing down, we're slowing down the world. The consumer has been in a recession since November of 2007."

U.S. GDP expanded at a 3.3 percent annual rate in the second quarter. But most economists attribute that rise to consumers spending their tax rebates. Like Gabelli, they expect the economy to slow rapidly.

The consumer weakness spells trouble for the stock market, Gabelli points out. "The concern over the earnings outlook for 2009 is well founded," he says.

Many experts also share Gabelli's dismal view of the outlook for U.S. consumers.

"Consumers are very focused on value, stretching their dollars, and anything deemed not absolutely of need, they are forgoing those purchases," Ken Perkins, president of Retail Metrics, tells Reuters.