Quicker Pace For Spending By Consumers

WASHINGTON, Dec. 22 (AP) — Keeping the nations cash registers ringing, consumers bolstered their spending in November by the largest amount in four months, raising some hopes that December will be much of the same.

The Commerce Department reported on Friday that consumer spending rose 0.5 percent last month. That was up from a 0.3 percent gain in the previous month and was the strongest showing since July.

It is clear that Santa Claus came to town early with this report, an economist at Argus Research, Richard Yamarone, said. You cant underestimate the consumer.

Fridays report also showed that Americans incomes — the fuel for future spending — rose a modest 0.3 percent for the second consecutive month.

The income and spending figures are not adjusted for inflation.

Wall Street investors, however, were not inspired and the Dow Jones industrials lost 78.03 points, to close at 12,343.22.

In other economic news, manufacturers experienced a rebound in demand for big-ticket goods last month, the department said in a second report. Orders for costly manufactured goods went up 1.9 percent, a turnaround from an 8.2 percent plunge in October.

Together the two government reports suggested that the economic expansion was not in danger of fizzling out, despite strains from the deepening housing slump.

The ailing housing market was the main reason economic growth slowed to a 2 percent pace in the late summer.

As troubles linger from housing, more sluggish performances are expected. But some economists — bouyed by the latest consumer spending figures — think economic growth in the current quarter could prove stronger than most had thought.

Thus far, consumers are doing their part to help keep the economy growing.

In November, consumers bolstered spending on big-ticket durable goods — cars and appliances expected to last at least three years — by a strong 1.2 percent, the most since July. Spending on nondurables like food and clothes, rose 0.7 percent, after a 0.6 percent cut the month before. Spending on services increased 0.4 percent, after a 0.6 percent rise.

With spending growth outpacing income growth, Americans personal savings rate — savings as a percentage of after-tax income — dipped to a negative 1 percent in November, the worst showing since August.

In the manufacturing report, new orders to factories rose in November for computers and communications equipment, as well as cars and airplanes. But demand for machinery, electrical equipment and primary metals, including steel, ebbed.

Manufacturers are having to deal with some fallout related to problems in the housing market as well as the struggling automotive industry.

There was some encouraging news Friday about inflation.

An inflation measure tied to the income and spending report showed core prices — excluding food and energy — — moderated last month. These prices rose 2.2 percent over the 12 months ended in November. That compares with a 2.4 percent gain in the 12 months ended in October.

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