NEWS | Wednesday, 26 March 2008

US consumer confidence at a five-year low

US consumer confidence fell to a five-year low, according to the closely watched Conference Board report.
Its index of consumer sentiment fell this month to 64.5, its lowest showing since March 2003.
The situation was even worse regarding the Conference Board’s forward-looking expectations index, which fell to 47.9, the weakest performance in 34 years.
A growing number of surveys have shown that US consumer confidence is falling sharply because of recession fears.
“Consumers’ outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon,” said Lynn Franco, director of the Conference Board’s research centre.
The latest consumer confidence data may increase the pressure on the Federal Reserve to lower US interest rates still further.
Earlier this month it cut rates to 2.25% from 3%, its sixth reduction since mid-September.
Peter Kretzmer, senior economist at Banc of America Securities, said the latest Conference Board figures were “very weak”.
“I would certainly call these recession-type numbers,” he said.
“Even if the financial market stabilises we are likely to see the labour market weaken for a couple of quarters.”
The Conference Board data comes 10 days after the separate University of Michigan consumer sentiment index fell to its lowest level in 16 years.
The University of Michigan said its index had only previously been that low during past recessions.
US consumer sentiment has been knocked by the sharp downturn in the housing market.