Poor US stock market performance over the past few weeks is weighing on the economy at a critical time, hindering corporate confidence and growth and making an anemic recovery more likely, economists say.

Most of the key fundamentals for economic expansion are in place, they say. But stock markets have lost ground, leaving many businesses with higher costs for raising capital and leaving investors -- who fuel two-thirds of US economic activity with their spending -- a lot less wealthy.

"I think it's certainly a big damper on the economic recovery," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis.

"It is unfortunate because it is coming when the underlying momentum of the economy was slowing anyway after a robust first quarter... Certainly the probability of a weak second and third quarter has increased because of the poor stock market."

Since stock prices hit unprecedented high around march 2000,

the economy has lost $5.6 trillion in wealth from declines as measured by the Wilshire 5000 total market index -- considered the broadest measure of stock market activity.

Most worrisome to analysts is the recent slide, driven by accounting jitters, fears of more attacks on US soil and, paradoxically, concerns about the strength of the US economic recovery.

In just the past 13 weeks, the Wilshire has declined by 7 per cent, the Dow Jones industrial average by 6.8 per cent and the tech-laden Nasdaq Composite Index by 12.9 per cent.

The economy steamed ahead in the first quarter at its fastest pace in more than two years as businesses slowed their pace of inventory reduction and as consumers, enjoying the lowest interest rates in decades, continued spending.

But economists now worry the poor showing in US equity markets will ultimately crimp spending. Growth in business investment in particular is regarded as crucial by Fed officials and private economists for a strong and sustainable economic recovery.