Confidence plunge bad news for Bush

HOPES of a robust US recovery took a knock as consumer confidence plunged in July.

The Conference Board reported that its key measure fell to 76.6 in July from 83.5 - the lowest for four months. The data sent the Dow Jones tumbling more than 90 points in New York, but it later recovered.

All indicators now point to modest consumption growth of just 3% in the third quarter, little improvement on the waraffected second quarter.

The anaemic recovery, which is not strong enough to bring down jobless totals, is bad news for President Bush ahead of next year's elections.

Paul Ashworth of Capital Economics says that after a smart post-Iraq rebound, consumers now appear to 'be more realistic about the economic outlook'.

If the weakness continues many economists expect the Federal Reserve, the US central bank, to cut interest rates from 1% to 0.5% before the year end.