Window shopping won't be enough to keep the US motoring

Earlier in the week, government figures also showed the trade deficit ballooning to previously unseen levels.

Economists are concerned that despite a slump in the dollar, domestic demand still is outstripping export growth.

With few jobs being created, the fear is that consumers may stop spending, halting the recovery in its tracks.

Little comfort

According to the Commerce Department, the current account deficit was $542bn (�302bn) last year. The previous high was $481bn set in 2002.

The shortfall actually narrowed in the fourth quarter from the same period a year earlier, though analysts said it was too little too late.

"The big picture remains that the US still has a large deficit and that is the key thing," said Daniel Katzive, a strategist at UBS.

"And whether it is up or down $5bn in any given quarter is not going to convince anyone that the US balance of payment is improving dramatically."

As a result, the dollar is unlikely to strengthen and according to Gary Thayer, chief economist at AG Edwards & Sons, is in danger of dropping further.

"We could still see the dollar vulnerable to further weakness," he warned.

Figures from the University of Michigan were equally disappointing, if not more unexpected, economists said.

Its closely watched index of consumer sentiment fell to 94.1 in March, from a revised 94.4 the previous month.

The market had expected a slight improvement in the data, rather than increasing evidence that Americans are becoming more worried about the outlook for the economy.

Bright spot

Even so, there was optimism in evidence with stocks climbing for the first day in five.

Some economists said that it would take more time for the weaker dollar to bolster exports and said one-off causes such as the high oil price were exacerbating the problem.

They also pointed to comments by Federal Reserve chairman Alan Greenspan earlier in the week.

Mr Greenspan said he was convinced that the rate of job creation would accelerate before too long.

"The more than two-year decline in the dollar is just begining to gain traction in boosting export demand," said Ken Mayland, president of Clearview Economics.