Economy: Feb. 23, 2001
A key barometer of consumer confidence was in free fall in February, dropping to its lowest level in more than seven years, and intensifying expectations that the Federal Reserve would have to act again, and quickly, to cut interest rates further to keep the U.S. economy from slipping into recession; the University of Michigan’s preliminary Consumer Sentiment Index, a snapshot of present-day consumer feelings, fell from 94.7 in January to 87.8 in February, while its Expectations Index, a measure of consumer attitudes about the near-term future, fell from 86.4 in January to 77.6; both indices are now at their lowest levels since the end of 1993; what made the drops all the more worrying to analysts was that they contradicted expectations that consumer confidence would rebound after the Fed cut interest rates by 1.0 percent in January.
