Consumer confidence in the US has fallen sharply, raising new worries about the strength of any economic recovery.

Consumer spending is not likely to gain momentum any time soon

Lynn Franco Conference Board

In August, consumer confidence fell for the second month in a row to stand at its lowest level since November 2001, according to a private research group.

The New York-based Conference Board said its index of consumer attitudes fell from 97.4 in July to 93.5 in August.

Analysts had expected the index to show only a very slight fall.

No momentum

Consumer spending accounts for approximately two-thirds of US economic activity and the figures are closely watched by economists.

Earlier this year, people appeared to be spending freely even though stock markets were continuing to fall and the economy looked gloomy.

And in July, when confidence was falling, car sales were strong and sales of new homes were at record levels.

Lynn Franco, director of the Conference Board's consumer research centre, said August's decline was a strong signal that business conditions had yet to turn around.

"It also suggests that consumer spending is not likely to gain momentum any time soon," she added.

Shares slip

The report also showed no improvement in consumers' confidence about current economic conditions.

Expectations for the next six months were mixed, but more people felt gloomy about the outlook for jobs.

The bad news about consumers sent US shares lower.

"The market is getting some heartburn today from the consumer confidence number," said David Sowerby, chief market analyst, Loomis, Sayles.

The Dow Jones index of leading US shares slipped 94.60 points or 1.1% to close at 8,824.41.

The technology weighted Nasdaq index fell 43.96 points or 3.2% to 1,347.78.

The broader Standard & Poor's index lost 13.13 points or 1.4% to close at 934.82.