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Fri, Mar 02, 2001 EST
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Consumer Confidence Falls
To Lowest Level Since 1996

   Fox Market Wire
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Shaken by layoffs and continued economic weakness, consumers are fast losing faith in the U.S. economy's ability to rebound, according to a report released Tuesday.

Consumer confidence in February fell to its lowest level in more than four years, undermined by increased pessimism about jobs and the economy.

The Conference Board reported Tuesday that its Consumer Confidence Index dropped to 106.8 — down from 115.7 in January. It marked the fifth consecutive drop in the monthly index, which fell to its lowest point since June 1996.

"The erosion in consumer confidence continues to be fueled by weakening expectations regarding business and employment conditions," said Lynn Franco, director of the Conference Board's Consumer Research Center.

But the economy continues to walk a tightrope, avoiding a plunge into recession, Franco added.

"While the short-term outlook continues to signal a severe economic downturn, consumers' appraisal of current economic conditions suggests we are still undergoing moderate economic growth and not a recession," she said.

Economist Joel Naroff said the reading on confidence, combined with the housing figures released Tuesday, show consumers are badly shaken.

"Consumers are seeing all the layoff news, they're hearing all the doom and gloom comments and they've gotten worried, there's no question about it," said Naroff of Naroff Economic Advisors in Holland, Pa.

Consumers continue to be pessimistic about the outlook over the next six months, the Conference Board said. The percentage of consumers expecting a pickup in business conditions declined from 13.1 percent to 11.1 percent, while those anticipating conditions to worsen increased from 15.2 percent to 17.8 percent.

In addition, only 10.2 percent of American consumers expect more jobs to become available, down from 11.7 percent last month. Those expecting fewer jobs to become available increased from 21.5 percent to 27.2 percent.

The Conference Board index, based on a monthly survey of some 5,000 U.S. households, is considered a key indicator because consumer spending accounts for about two-thirds of the nation's economic activity. The index compares results to its base year, 1985, when it stood at 100.

The Associated Press contributed to this report.

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