The Conference Board confidence index fell to 64.5 this month, reaching a 5-year low. It is significantly lower than both the February index and the expected value, 76.4 and around 73 respectively. Moreover, consumer expectations for the next six months dropped to a 35-year low at 47.9.

"Consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon," said Lynn Franco, director of the Conference Board's research centre, in a statement.

The business-backed research group Conference Board said the March index is as low as it was before the boost received by the Iraq invasion of 2003.

"Even if we emerge from recession sometime this summer, the second half of the year is going to feel bad," said economist Bernard Baumohl, executive director of The Economic Outlook Group in Princeton Junction, N.J., to AP. "For most people, they won't be able to tell if the economy is growing 1 percent or shrinking 1 percent."

The drop in customer confidence appears to be caused primarily by concerns over job security in an ever-tightening job market. For example, the proportion of consumers expecting their incomes to increase declined to 14.9 percent from 18.0 percent last month.

The Conference Board announcement sent the dollar touching new daily lows against other major currencies. The US currency fared worst against the yen and remained somewhat stable against the euro and pound.