Page last updated at 14:41 GMT, Tuesday, 27 May 2008 15:41 UK

US consumer mood at 16-year low

Shoppers in New York
Consumers are worried about the state of the US economy

Confidence among US consumers hit its lowest level for 16 years in May, according to the Conference Board.

The research body's Consumer Confidence Index fell to a level of 57.2 in May, down from April's figure of 62.8.

The Conference Board blamed the pessimism on the short-term outlook for the US economy as well as weakening business and job conditions.

The figures tell a similar story to the University of Michigan's Index, which hit a 28-year low in May.

"There is a fear the economy is in a recession or going into one and people may find their jobs in jeopardy," said David Coard from the Williams Capital Group in New York.

"When you talk to people on the street they seem to be really being squeezed at the pump and the supermarket while their income isn't keeping up."

Turnaround unlikely

The Conference Board also issued pessimistic forecasts for the coming months.

"Consumers' inflation expectations, fuelled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead," said Lynn Franco, director of the Conference Board Consumer Research Center.

"As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead."

The index is based on responses from 5,000 US households.

It has plunged since last July, when it stood at 111.9.

Since then, the housing slump and rising prices for food and fuel have taken their toll on the mood among consumers.

The figures are closely watched because consumer spending accounts for two-thirds of all economic activity in the US.


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