Recession fears gripped the global economy on Tuesday as news of a plunge in US consumer confidence in the wake of the deadly attacks on the United States two weeks ago raised doubts over a speedy US recovery. Eager to assure the world that their economies will rebound, US officials and their counterparts from other top industrial economies hit the airwaves to shore up confidence.
Finance ministers from the Group of Seven (G7) major economies prepared for a meeting next month after agreeing in a telephone conference on Tuesday to cooperate in efforts to choke off funds to "terrorist groups." Cementing hopes of more deep interest rate cuts from the Federal Reserve, a closely watched survey of US consumers said confidence suffered its sharpest drop in September in almost 11 years, hurt by an eroding labour market and weakening business conditions. The Conference Board, a private research group, said its monthly index of consumer confidence fell 16.4 points to 97.6 in September, from a downwardly revised 114.0 in August.
However, 88 percent of the survey responses were conducted before the devastating attacks of Sept. 11, which led many economists to conclude that confidence will take an even harder hit once those effects are measured in the October survey.
Bureau Report