- The Washington Times - Friday, February 28, 2003

ANN ARBOR, Mich., Feb. 28 (UPI) — Worries over the soft U.S. economy, terrorism and possible war against Iraq sent Americans into a bunker mentality with consumer confidence falling to a 9-year low, according to a report released Friday.

The University of Michigan's latest consumer sentiment index fell to 79.9 in February from 82.4 in January.

"Consumers anticipated that the pace of economic growth will slow in the months ahead, but most consumers expect a quick resolution to the war, and thus expect only a temporary impact on the overall economy," said Richard T. Curtain, director of the University of Michigan's Surveys of Consumers.

The plunge was less than the 79.2 level some economists expected but followed a surprising Conference Board report on Tuesday that consumer confidence fell to a near decade low in February, from 78.8 to 64, because of geopolitical fears and a no-job economic recovery.

"While the spending rate can be expected to improve in the second half of 2003, the pace of gains will remain sluggish as consumers expect a slow and uneven rebound in jobs and incomes and report a greater desire to repay debts and rebuild their savings and reserve funds," Curtain said.

Consumer spending supports about two-thirds of U.S. economic activity and is vital to the recovery. Consumers said soaring energy prices for gasoline and natural gas hurt their financial situation but inflation was not a major worry overall.

"Nearly as many consumers reported that their overall financial situation had worsened as had improved in the February survey," Curtain said.

The University of Michigan consumer sentiment survey is based on telephone interviews with about 500 households nationwide.

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