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Tuesday, 30 July, 2002, 21:01 GMT 22:01 UK
Consumer gloom hits US economy
Manhattan street scene
Consumer confidence has been hit by falling shares
The big fall in share values has sapped the confidence of US consumers and is threatening the economic recovery, according to a new study.

The latest report from the Conference Board, a private research group, revealed that its confidence index had fallen to 97.1 in July, down from 106.3 in June.

The fall was the biggest since October, and left the index at its lowest level since February.

"The continued decline in the value of stock market portfolios, coupled with ongoing reports of corporate scandals, have taken a toll on consumer confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center.

The news knocked share prices on Wall Street, but they recovered in afternoon trade and the Dow Jones index closed down 31.85 points at 8,680.03.

Growth threat

Earlier this month, the latest consumer confidence study by the University of Michigan also showed falling optimism among US shoppers.

Strong domestic demand is seen as vital if the US economy is to enjoy a strong recovery in growth.

The Conference Board's report said a continued slide in optimism could "very well jeopardize the economic recovery."

Pessimism over consumers' assessment of the job market also worsened last month.

Analysts said the trend was worrying.

"It's not the level that we're at that's the problem, it's the direction," said Carey Leahey, senior economist at Deutsche Bank Securities.

"If you lose 20 points in the next three months, you've got a problem for the economic recovery."


Economic indicators

Fears and hopes

US Fed decisons

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30 Jul 02 | Business
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