Ford suffered falling US sales in 2007

Alan Mulally said the slowdown was hitting sales of homes, and other large items such as cars.

Last year Ford's sales in the US fell nearly 3% to 16.14 million vehicles, their lowest since 1998 and down from 16.55 million in 2006.

However, Ford saw sales in China rise by 30% to 216,325 vehicles.

The sales rise in China was mainly boosted by sales of the mid-size Ford Focus car, which saw its sales jump by 57%.

'Tougher'

Mr Mulally's warning about the US market came ahead of the North American International Auto Show.

The carmaker is in the middle of a restructuring programme - brought in after large losses in 2006 - which it hopes will bring its North American operations back to profitability to 2009.

"For us, any slowdown in the economy - the housing industry, financing of vehicles, tightening of credit, housing starts - it puts a lot of pressure on consumer confidence to big-ticket items, " Mr Mulally said.

"Clearly, it makes it tougher. We took the actions starting a year and a half ago to deal with this."