US consumer confidence tumbles to record low

As recession bites and fears grow over job security, US consumer confidence has plummeted to a record low in January.

According to the Conference Board’s monthly consumer index, confidence fell to 37.7, from a revised 38.6 in December, below analysts’ expectations of 39.

The figure is the lowest since the New York-based group started monitoring consumer sentiment over 40 years ago.

The survey of 5,000 US households is a measure of consumer spending and accounts for two-thirds of the US economy.

Lynn Franco, director of the Conference Board, comments that consumers remain somewhat pessimistic about the state of the economy.

The news comes as the US retail industry is suffering as a result of consumer cutting back.

It was announced on Monday that US construction equipment maker Caterpillar, based in Illinois, is shedding nearly one-fifth of its workforce (20,000) as it is hit by the severe downturn in the global construction industry

Furthermore, US pharmaceutical giant, Pfizer, announced it is to buy rival Wyeth in a deal worth $68 billion (£50 billion).

However, the newly-formed group comes at a high price to employees with Pfizer planning to eliminate 8,000 jobs, or 10% of its workforce as it plans to shut five factories.

US President Barack Obama recently announced a $800 billion (£586 billion) stimulus package for the US designed to save or create 4 million jobs.

Mr Obama is in the process of persuading Congress to approve the measures so he can begin work on dragging the world’s largest economy out of recession.

However, on a positive note, figures earlier this week from the National Association of Realtors revealed a surprise rise in US home sales in December, as buyers took advantage of lower house prices.

The organisation said sales of existing homes rose 6.5% to an annual rate of 4.74 million, from 4.45 million in November.

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