Consumer confidence plummeted on both sides of the Atlantic this month in the wake of the 11 September terrorist attacks, new surveys have shown.
US consumer confidence fell to its lowest level in more than seven years while a senior US Treasury official said a fall in GDP was "quite likely".
Meanwhile, a report published today showed a fall in both UK consumer confidence and the number of visits to major shopping centres.
The US Conference Board said its confidence index dropped from 97.0 to 85.5, its lowest since February 1994. The scale of the collapse triggered a sharp sell-off on the dollar, to a two-week low of 91 cents against the euro, and on stock markets. On Wall Street the Dow Jones was down 126 points, or 1.3 per cent, by noon while in London the FTSE 100 closed down 80 points, or 1.6 per cent.
Lynn Franco, the research director at the Conference Board, said the outlook was "increasingly pessimistic". "Widespread layoffs and rising unemployment do not signal a rebound in confidence anytime soon," she said.
Separately Karen Hendershot, acting director of macroeconomic analysis at the US Treasury, said the attacks had added "significant stress to an already sluggish economy". "As a result, it now seems that some decline in GDP is quite likely," she said.
Confidence among Britons fell to its lowest level since the last recession, according to a survey of more than 2,000 people. The balance of people confident in the economy dropped to minus 33, the lowest since September 1990, according to analysts at GfK.
However, there was little impact on consumers' spending plans: there was an increase in the number saying they would make a major purchase.
But hopes of a high street bonanza last week, when most schools were on half-term holiday, were dashed. The number of people visiting the country's 50 top shopping centres fell 5 per cent compared with the same week a year ago, according to analysts FootFall. Marketing manager David Smyth said reports of a million people cancelling overseas holidays had not translated into a shopping spree.Reuse content