US consumer attitude dampens

loss of its top credit rating and heart-wrenching drops in major stock indexes.
The Conference Board, an industry group, yester-day said its index of consumer attitudes sank to 44,5 from a downwardly revised 59,2 the month before. Economists had expected a much less pronounced decline.
Concerns have grown that the United States might be heading toward a new recession. Consumers’ flagging confidence might lead them to shut their wallets, although retail sales data hasn’t pointed in that direction yet.
“What we are effectively going through is a crisis of confidence,” said Tom Porcelli, an economist at RBC Capital Markets in New York.
The United States lost its AAA credit rating earlier this month following a drawn out battle in Washington over spending that nearly led the country to default on its obligations. US Treasuries prices extended gains on Tuesday on fears a pullback in consumer spending could trigger recession, while US stocks fell.
The dollar hit a session low against the yen.
So far this year, data from industrial production to employment have been consistent with a slow-growth scenario rather than an outright contraction in economic output.
“There is basically nothing for consumers to be confident about,” said Gennadiy Goldberg, a fixed income analyst at 4CAST in New York.
Concern over the outlook led the US Federal Reserve earlier this month to say it would hold interest rates at rock-bottom level for at least the next two years, a decision that drew three dissents.
Some Fed officials favour doing more to bring down the unemployment rate. – Reuters.