The New York-based Conference Board said its Consumer Confidence Index fell in January for the second straight month.
The private research group said the index dropped to 79 from a revised 80.7 in December. Analysts had been expecting a bigger decline in the index to a reading of 78.5 for January.
"Overall readings continue to reflect the country's lackluster economic activity," said Lynn Franco, director of the Conference Board's Consumer Research Center. "Now, with the threat of war looming, consumers have grown increasingly cautious about the short-term outlook."
The Conference Board said consumers' expectations for the next six months are also lower, compared with how they felt at the end of 2002. Those expecting the economy to perform worse in the first half of this year rose to 14% from 11% in December, while the percentage of people anticipating an improvement in business conditions dropped to 17.7% in January from 21.2% in December.
January marks the second straight decline for the index. Except for November, it has gone down every month since May 2002.