Alan Greenspan: No shopping boom expected

Meanwhile, the University of Michigan's closely-watched consumer sentiment index - which measures shoppers' confidence in personal finances, business conditions and buying conditions - showed a sharp fall in February.

Consumer spending and confidence are vital indicators of the health and prospects for the US economy, as they account for more than two thirds of economic activity in the States.

The part of the University of Michigan index which measures consumers' attitudes about their present financial situation, edged up slightly in February from January.

But the expectations index, which measures attitudes about the year ahead, fell in February.

Frustrated shoppers

The university's survey is based on telephone interviews with about 500 people across the US.

Analysts are watching consumer spending levels particularly closely as they look for signs of the economy coming out of recession.

However, aggressive interest rate cuts last year have propped up spending throughout the recent downturn in the economy.

This means that the usual pattern of frustrated shoppers going on a spending spree as they detect the end of economic hard times is unlikely to be seen this time.

Federal Reserve Chairman Alan Greenspan told the House of Representatives earlier this week: "Although household spending should continue to trend up, the potential for significant acceleration in activity in this sector is likely to be more limited than in past cycles."