Job losses, anthrax hit US shoppers

A BLEAK jobs environment and nervousness over anthrax is taking a heavy toll on US consumers, pushing down America's key shoppers index in October to its lowest level in nearly eight years. The index slumped from 97 in September to 85.5 this month, well short of the market's expectations and low enough to trigger fresh concerns about a prolonged economic slump.

The Dow Jones Industrial Average had crashed 1.5% by mid-session as investors digested the fall in consumers' current outlook and their future expectations. Consumer spending powers two-thirds of the US economy and there was almost nothing to give Wall Street hope of a quick recovery from the economic downturn that gathered momentum in the third quarter.

The index measuring consumers' outlook for the next six months fell sharply from 78.1 to 70 as Americans absorbed grim news from corporate boardrooms, including lay-off announcements in the wake of 11 September.

The Nasdaq dropped 1.8%. In the Treasury market, investors flooded to shorter-issue securities and interest rates eased as the weak consumer report raised the likelihood the Federal Reserve will slice rates more aggressively when the monetary committee meets next week.