War talk scares off US shoppers

War talk scares off US shoppers

Shoppers ride to the rescue of the US economy again

US consumer confidence hit a nine-year low in February, as the threat of war, terror attacks and unemployment frightened the population.

The University of Michigan's consumer sentiment index dropped to 79.9 this month - its lowest level since September 1993 - from 82.4 in January, according to Reuters.

The confidence figures - which are released only to subscribers but are usually leaked - came after the US government reported that the economy grew more in the last quarter of 2002 than previously estimated.

In the three months to December, the economy expanded by 1.4%, up from the previous estimate of 0.7%, according to the US Commerce Department.

Retail sales push

Economists had expected the figure to be revised upwards but only to about 0.9%.

The initial figure surprised analysts when it was released after 4% growth in the third quarter.

But the Commerce Department left its figure for overall economic growth in 2002 unchanged at 2.4%, compared with 0.3% In 2001.

The stronger retail sales and businesses increasing their inventories were behind the higher fourth quarter figure.

Consumer spending accounts for about two-thirds of US economic activity.

Business spending up

Consumer spending rose by a revised 1.5%, up from the initial estimate of a 1% gain, but was still down from a 4.2% increase in the previous quarter.

But a big trade deficit in December offset the gains.

Inflation fell in the fourth quarter, with the consumer price index rising a revised 1.6%, down slightly from the previous 1.9% increase.

Business spending rose in the quarter by one percentage point to 2.5%, the first rise since the third quarter of 2000.

There are usually two revisions of US GDP data.

The final figures are due for release on 27 March.