US consumer gloom deepens in June

US consumer confidence fell by more than expected in June, according to a key confidence survey.

The Conference Board's Consumer Confidence Index fell to 50.4, the lowest level since February 1992.

Confidence is down with the economy being hit by both a property slump and rising prices for food and fuel.

The Conference Board's survey is closely watched because consumer spending accounts for two-thirds of US economic activity.

June's figure was down from a reading of 57.2 in May, and below analysts' expectations of 56.5.

Economic gloom

"It's not hard to explain what's depressing consumers these days - you just need to look at gasoline prices and home values," said Dana Saporta, an economist at Dresdner Kleinwort.

"Perhaps the silver lining to this otherwise dismal report is that consumer confidence may be nearing a bottom"
Lynn Franco, consumer research director, Conference Board

Meanwhile, the future remains bleak according to the Conference Board.

The percentage of consumers expecting business conditions to get worse over the next six months jumped to 33.9% from 32.9% the previous month.

And the percentage of those expecting fewer jobs to be created in the months ahead rose to 35.5% from 32.3%.

The confidence index, which is based on responses from 5,000 US households, has fallen steadily over the past year and stood at 111.9 last July.

The Conference Board's director of consumer research, Lynn Franco, believes the economy could be stuck in low gear for some time.

"Looking ahead, consumers' economic outlook is so bleak that the (Conference Board's) Expectations Index has reached a new all-time low," she said.

"Perhaps the silver lining to this otherwise dismal report is that consumer confidence may be nearing a bottom."

But the US Federal Reserve has signalled it has shifted its focus from recession fears to worries about the impact of inflation on the economy.

Federal Reserve policy makers, who begin a two-day interest rate meeting later on Tuesday, are expected to leave the cost of borrowing at 2% on Wednesday.

Analysts believe rising inflation could push up interest rates later in the year.

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