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Last Updated: Tuesday, 29 January 2008, 15:59 GMT
New dip in US consumer confidence
Consumers are wary of spending in the current economic climate
Confidence among US consumers fell sharply in January on worries about the health of the job market and business conditions, new figures show.

The Conference Board said its index of consumer sentiment, based on a survey of 5,000 households, fell to 87.9 from 90.6 in December.

The index has been weakening since July and any cutback in consumer spending could further undermine the US economy.

The January reading was broadly in line with economists' forecasts.

"Consumers' appraisal of current business conditions is becoming more negative and their assessment of the job market, while slightly less negative than in December, is more negative than a year ago," said Lynn Franco, director of the Conference Board Consumer Research Center.

Recession looming?

The data was collected before the Federal Reserve unexpectedly cut interest rates by an aggressive three-quarters of a percentage point to 3.5% last week.

The move was designed to shore up plummeting global stock markets, which were unsettled by growing fears of a US recession.

The Fed is expected to cut the cost of borrowing by at least another quarter of a percentage point when it finishes its two-day meeting on Wednesday.

The US economy is expected to slow sharply this year. Some economists are forecasting a recession as turmoil in the housing and financial markets hits ordinary households.

"They are worried about the up-and-down stock market, falling house values and high gasoline prices. But they still have jobs," said Mark Zandi, chief economist at Moody's

"So until the job market weakens noticeably, confidence will be weak but it won't unravel," he said.

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