US consumers felt more confident about the economy this month than at any time in the last two years, but retail sales have cooled significantly, with major stores blaming unseasonable weather and slow Father's Day sales.

The Conference Board, a private forecasting body, said its index of consumer confidence rose to 101.9 in June from 93.1 in May, way above analysts' expectations of a reading of 95.0 this month and the highest since June 2002.

"These numbers in confidence are very good if they are translated into retail sales numbers," said Ms Lynn Reaser, chief economist at Banc of America Capital Management in St Louis.

However, chain store reports on Tuesday predicted weak sales in June and followed lower sales forecasts from retailing giants Wal-Mart and Target because of cool, wet weather.

In addition, a warning from General Motors hinted at a broader spending slowdown.

Rounding off the spate of bad retail news, the car maker said sales in June have been weaker than expected as it braced for a potential drop in year-over-year sales gains.

If the retail sales warnings reflect a retrenchment in consumer spending, the Federal Reserve may indeed follow the measured pace it has hinted at in lifting interest rates from the lowest level in more than 40 years.

The Fed's policy-making Federal Open Market Committee (FOMC) was to start a two-day meeting later on today, with a quarter-point increase in the Federal Reserve's funds rate expected on tomorrow.

If sluggish consumer spending shows up on the government's initial reading of second-quarter gross domestic product, due on July 30th, the Federal Reserve would be more inclined to take a restrained view on interest rates when it meets again in August.