Consumer Confidence Expected to Tumble

Consumer confidence is expected to sink this month to the lowest level in more than five years as terrorist violence aggravated concern about the U.S. economy, analysts are predicting. The drop may be short-lived, some believe.

Forecasts call for a September reading of 105 in the Conference Board’s index, the lowest since June 1996, compared with 114.3 in August. The index already has declined for two straight months.

“We expect a significant weakening,” said Peter E. Kretzmer, chief economist at Banc of America Securities in New York. The level of confidence may determine how much shoppers spend, which is critical to keeping the economy out of recession.

The Conference Board issues the numbers Tuesday, two weeks after hijackers killed thousands of people by crashing four jetliners.

Consumers may bounce back sooner, as a growing sense of national purpose overcomes worries about jobs and stock prices, analysts said.

The Conference Board’s survey was conducted Sept. 1 to 21. Because attitudes may have changed rapidly within that period, the New York group plans to provide an analysis of responses made before and after Sept. 11.

On Friday, the Commerce Department will issue revised figures on second-quarter economic growth. Analysts expect that the economy grew at an 0.1% annual rate in the second quarter, which would be the weakest since a 0.1% decline in the first quarter of 1993.

Also on Friday, a report from the University of Michigan is expected to show consumer confidence fell this month.

Other economic reports this week:

* Today, the Conference Board will issue its index of leading economic indicators.

* Thursday, the Commerce Department will report on new-home sales for August, as will the National Assn. of Realtors.

* Thursday, the Commerce Department will issue its August report on factory orders for durable goods.

* Friday, a report from the Chicago purchasing managers is expected to show that manufacturing in the Chicago region remained depressed.