The 0.2 percent decline in incomes was the first dip since
July and reflected in part the loss of more than 500,000 jobs in November.
The government said consumer spending fell by 0.6 percent
last month, slightly smaller than the 0.7 percent decrease that economists had
expected, according to the Associated Press. It followed a 1 percent fall in
Factoring in decreasing gas prices actually made the numbers
appear worse. Excluding the price changes, consumer spending would have dropped
by 0.5 percent in October and risen by 0.6 percent in November, the AP
The average price of unleaded regular gasoline at the pump
fell by $1 to $2.11 in November from the previous month, according to AAA,
reported Bloomberg News.
Economists say the overall trend for consumer spending is
down because of a deepening recession, a financial crisis that has tightened
access to credit for millions of borrowers, and massive job losses.
Michael P. Niemira, chief economist for the International
Council of Shopping Centers, is forecasting that sales at established stores in
November and December will be down 1.5 percent to 2 percent — making this the
weakest holiday season since at least 1969, according to the AP.
Retailing giant Wal-Mart Stores Inc. is one of the few bright
spots in the current environment. Some merchants including Ann Taylor Loft have
e-mailed customers promoting after-Christmas discounts that can be enjoyed now.
Also Wednesday, the Labor Department reported that initial
requests for jobless benefits rose to a seasonally adjusted 586,000 in the week
ending Dec. 20, from an upwardly revised figure of 556,000 the previous week.
That’s much more than the 560,000 economists had expected.
That’s also the highest level of claims since November 1982,
though the work force has grown by about half since then.
Jobs have been a particular concern for investors. The more
people lose their jobs or fear they will lose their jobs, the more they close
their wallets. And consumer spending accounts for more than two-thirds of U.S.
The Commerce Department also reported that orders to U.S.
factories for big-ticket manufactured goods fell again in November, reflecting
further setbacks in the battered auto industry and a big drop in demand for
Orders for durable goods fell 1 percent last month, a
decline that was smaller than the 3 percent decrease economists had been
expecting. However, the decrease was on top of an 8.4 percent plunge in orders
in October, which had been the biggest decline in eight years.
The weakness in November reflected a 37.7 percent fall in
demand for commercial aircraft and a smaller 0.2 percent drop in orders for new
vehicles and auto parts.
Earlier this week, the government reported that the overall
economy, as measured by gross domestic product, was declining at an annual rate
of 0.5 percent in the July-September quarter and analysts believe the
contraction will accelerate in the current quarter, according to the AP.
The economic weakness is helping to keep inflation under
control. A price gauge tied to consumer spending fell by a record 1.1 percent
in November. Excluding the cost of energy and food, the price index was
unchanged last month, the AP reported.
Wall Street was narrowly mixed in Wednesday trading, which
is considered largely inconsequential in the grand scheme of things. Trading
volumes were extremely low ahead of Christmas, and the markets close early at 1
p.m. ET. With only four trading days left in 2008, most buying and selling
appears to be investors trying to dress up their portfolios after a year of
unprecedented market turmoil.
In early trading, the Dow Jones industrial average rose
33.93, or 0.40 percent, to 8,453.42.
Broader stock indicators were mixed. The Standard &
Poor’s 500 index futures rose 1.17, or 0.14 percent, to 864.33, while the
Nasdaq composite index fell 1.34, or 0.09 percent, to 1,520.20.