Wednesday, March 26, 2003

Consumer confidence at lowest since 1993

By Anne D'Innocenzio
The Associated Press

NEW YORK - Growing worries about the economy and war in Iraq drove down consumer confidence for a fourth consecutive month in March, a private research group said Tuesday.

The Consumer Confidence Index fell to 62.5 from a revised 64.8 in February, the New York-based Conference Board said. The reading was the lowest since October 1993, when the confidence index registered 60.5 as the country was slowly recovering from the 1991 recession.

Still, the March decline was slightly better than expected and not nearly as drastic as the 14-point drop experienced in February. Analysts had expected a reading of 62.0 in March.

The Conference Board's index is derived from responses received through March 18 - before the start of war in Iraq - to a survey mailed March 1 to 5,000 households in a consumer research panel.

The results released Tuesday are from a partial sample of at least 2,500 respondents and are subject to revision once the full sample - typically 3,500 households - is in.

"While a quick and successful outcome in the Middle East conflict would certainly ease some of the uncertainties facing consumers and therefore boost confidence, it is the economic fundamentals that will determine whether a rebound is sustainable," Lynn Franco, director of the Conference Board's Consumer Research Center, said in a statement accompanying the report.

"The end of the Gulf War in 1991 produced a surge in confidence, but labor market conditions quickly diminished the spark," she said.

Economists closely monitor consumer confidence because consumer spending accounts for two-thirds of U.S. economic activity.

Consumers are spending more cautiously, and the big concern is that a prolonged war, mounting casualties or another terrorist attack could prompt shoppers to pull back even more, sending the economy back into recession.

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