U.S. Consumer Spending Falls 1%, Most in Seven Years, as Recession Deepens

Consumer Spending in U.S. Falls 1%, Most in 7 Years (Update1)

By Shobhana Chandra


Nov. 26 (Bloomberg) -- Spending by U.S. consumers dropped in October by the most since the 2001 contraction, signaling the economy is sinking into a deeper recession.

The 1 percent decline in purchases followed a 0.3 percent drop in September, the Commerce Department said today in Washington. A separate report from Commerce showed business investment also tumbled last month.

The biggest consumer spending slump in three decades is likely to persist as home prices fall and job losses mount, threatening the holiday sales outlook at retailers from Zale Corp. to Best Buy Co. Faltering demand has caused the Federal Reserve, Treasury and President-elect Barack Obama to ratchet up plans to ease the credit crisis.

``Everybody is cutting back at the same time,'' Christopher Low, chief economist at FTN Financial in New York, said before the report. ``This takes us out of the generic recession category and puts us in the severe recession category.''

A Labor Department report showed that initial claims for unemployment insurance last week slipped to 529,000 from 543,000 the prior week, while remaining close to the highest level since 1992.

Treasuries, which rose earlier in the day, stayed higher after today's reports. Yields on benchmark 10-year notes fell to 3.05 percent at 8:38 a.m. in New York, from 3.12 percent late yesterday. Futures contracts on the Standard & Poor's 500 Stock Index fell 2.1 percent to 835.40. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=arImKeG53bCI&refer=home

fearing that black friday will be exactly that, this is the Bush legacy.

Department stores have gotten people out early this year.

.... for department stores, big-ticket electronics retailers and the like.

Actual conservation.