US consumers cut spending in February, and the labour market continued to weaken, suggesting the household-spending pillar that had supported the economy's expansion may be giving way.
Retail sales unexpectedly plunged 0.6 per cent last month, while the ranks of workers remaining on state unemployment benefit rolls hit the highest level in nearly two-and-a-half years in the final week of February, government reports today showed.
Consumers, who fuel roughly two-thirds of economic growth, held back on spending in a wide range of areas amid surging food and energy costs and a decline in wealth as their home values tumbled.
The dismal data left Wall Street analysts predicting the Fed will reduce interest rates by 75 basis points by Tuesday, when the next policy meeting is scheduled.
The dollar continued on its downward spiral, sinking against the euro and the yen.
Prices for government debt held steady at higher levels on the expectations for weaker interest rates, and US stocks tumbled on the weaker-than-expected retail sales data.