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US Consumer Confidence Continues to Drop - 2003-03-25


U.S. consumer confidence, which hit a ten-year low in February, fell again this month, dampening hopes of an economic recovery.

The Consumer Confidence Index now stands at 62.5 - a two point drop from February's 64.8. February's reading marked the lowest dip since October 1993.

According to one analyst, as long as the labor market remains depressed, the downward spiral will continue. Stock market rallies, even success in the war on Iraq, will provide only temporary relief, says Lynn Franco, Director of the Consumer Research Center at the Conference Board, a private business analysis group.

"While we could have a successful outcome in the Middle East, what we've seen in the past, in the prior Gulf war, was that there was a temporary surge in confidence when that conflict ended, and then it came back to the basics, to the fundamentals," she said. "We spent a few years with volatile confidence readings simply because labor market conditions were weak, and that's pretty much the same scenario this time."

Ms. Franco says that the economy's growth has been too sporadic to generate new jobs. In fact, more than 300,000 jobs were reported lost in early March.

The news is worse for New York, the U.S. financial capital.

"It's below the national average. Again, that's heavily dominated by what's happening in the financial markets, because that makes up such a large bulk of the workforce here," she said. "And with the bearish market, things have obviously not been going well, and had even more of a dampening effect. And there are a variety of other uncertainties terror alerts being one."

The Conference Board surveys 5,000 U.S. households every month, asking about their current buying habits and their outlook on the over-all economy.