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Tuesday, 9 October, 2001, 18:29 GMT 19:29 UK
Survey says Americans fearful
University of Michigan 'How America Responds' survey results
Results of a survey show half of Americans are fearful
David Schepp

Americans' sense of personal safety and security has been greatly affected by the recent terror attacks and the heightened fears may further erode an already weak US economy, a new report has found.

About 20% of all consumers surveyed shortly after the attacks said their sense of personal safety was shaken a good deal by the attacks and thus were much less optimistic about future economic prospects, according to the University of Michigan Institute for Social Research (ISR).

The loss in people's sense of personal security was linked to the decline in consumer confidence

Richard Curtin,
University of Michigan researcher
The University of Michigan regularly reports its findings on Americans' faith in the US economy in its Survey of Consumers, a much-watched indicator of future economic activity.

In response to the events of 11 September, ISR conducted a special survey of US consumers to determine what effect, if any, the attacks had on consumer confidence.

Loss of confidence

Researchers found nearly half - 49% - of all those polled felt their sense of safety or security was either affected a "great deal" or a "good amount" by the attacks on New York and Washington.

"The loss in people's sense of personal security was linked to the decline in consumer confidence," said University of Michigan economist Richard Curtin, who directs the university's consumer survey.

Firefighters walk among the smouldering ruins of the World Trade Center
The attacks have affected buying habits...
In releasing its latest findings, the University of Michigan said non-economic factors have on occasion played a role in determining trends in confidence.

But there are few other instances when such fears have been as dominant.

The survey also says concerns about safety are unlikely to be easily or quickly calmed even if there are no further attacks on the United States.

"Restoring consumer confidence becomes more than just a matter of economic stimulus," Mr Curtin said.

Rising unemployment

As part of its How America Responds survey, the University of Michigan also polled Americans' feelings over the nation's unemployment rate, which has rising a full percentage point during the last year.

The survey results showed 61% of those polled expect the national unemployment rate to rise during the year ahead. That compares with 11% who expect the rate to fall.

Wal-Mart store front in Massachusetts
... And businesses are concerned consumers will stay away
A comparably pessimistic outlook has only been recorded during University of Michigan consumer surveys during recessionary periods in the last 30 years, university researchers said.

"Data from the Surveys of Consumers indicate that consumers now anticipate the unemployment rate to rise to about 6% by early 2002," the University of Michigan's Curtin said.

Latest figures from the US labour department showed the nation's unemployment rate stood at 4.9% in September, unchanged from August's rate.

More tax cuts?

In response to the attacks, President George W Bush has called on Congress to implement a $60bn to $75bn economic-stimulus package.

Mr Bush has said he would most likely support a programme of tax cuts over other stimulus measures.

To measure consumers' response to further future tax cuts, the University of Michigan also polled Americans' on how they would use a new tax rebate of $1,000, if they received one this autumn.

Only about 15% said they would spend the additional tax rebate. An overwhelming number - 85% - said they would use the money to reduce debts or to rebuild savings.

Those results are inline with the current reaction to the $300 per person rebates mailed to taxpayers over in July, August and September.

Economists have expressed concern that those rebates are not having the desired effect because consumers are electing to not spend it in the shops.

See also:

08 Oct 01 | Business
Retaliation may hinder US economy
03 Oct 01 | World
Bush package to boost economy
26 Sep 01 | Business
US economy in freefall
25 Sep 01 | Business
IMF shrugs off recession fears
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