US and British consumer confidence hit new lows

US and British consumer confidence have sunk to new lows, raising fears about the prospects of a global economic recession.

British consumer confidence hit a seven year low in March while figures out of the US hit a 10-year low, raising concerns another recession in the US, analysts warned.

To date the US consumer has kept the economy ticking over while the manufacturing sector went into recession. Concerns over the war partly explain the downturn, but is not the full picture.

British consumer figures shrunk to their lowest level in more than seven years last month, even before the war with Iraq started.

Martin Hamblin GfK’s consumer confidence barometer fell to -10 in March from -9 in the month before.

That bring it to its lowest level since December 1995 when the index stood at -11.

Meanwhile, in a more worrying trend, US consumer sentiment slid to its lowest in almost a decade in March after hopes for a quick end to the war in Iraq evaporated.

The key University of Michigan’s final index of consumer sentiment for March fell for a third straight month to 77.6, its lowest since September 1993, from 79.9 in February, according to Reuters.

That was better than a mid-month reading of 75.0 and a 75.3 forecast by economists.

The expectations index also rose from its mid-month level even as attitudes about the current state of the economy soured further.

Most of the responses compiled for the final March survey were taken before the battle in Iraq bogged down, and analysts in the US said April’s measure of sentiment would better reflect consumer sentiment.

In the US consumers have witnessed rising layoffs, stock market losses, fears of terror attacks and, until this month, uncertainty about the outbreak of war.

“What happens next likely depends greatly on the progress of the war,” said Ian Shepherdson, chief US economist at High Frequency Economists.

Financial markets looked past the consumer sentiment data to focus on the likelihood of an extended war. Stocks and the dollar fell while treasuries gained for a fifth straight session.

Continuing erosion in confidence has taken its toll on spending, with retail sales, auto sales and even the robust housing market all showing signs of weakening.

A persistent retrenchment by consumers risks pushing the economy back into recession, analysts in the US warned.