By Shobhana Chandra Nov. 23 (Bloomberg) -- The U.S. recession probably deepened as consumer spending plunged in October by the most since the 2001 downturn and businesses slashed investment, government reports may show this week. Purchases declined 1 percent after a 0.3 percent drop the prior month, according to the median estimate of economists surveyed by Bloomberg News ahead of Commerce Department figures due Nov. 26. Commerce may also report the same day that orders for long-lasting goods fell for the second time in three months. The credit crisis has forced cash-strapped consumers to pull back on purchases and companies to cut spending and step up firings. Housing and manufacturing also are deteriorating, a sign the economy is sinking further into what may be the most severe slump in decades. ``The economic indicators are all in the same vein, pointing to a deepening recession,'' said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. ``Everything is contracting. The economy will stay in a recession for at least six months.'' The Commerce Department's spending report may also show that incomes rose 0.1 percent in October, the smallest gain in three months, according to the Bloomberg survey. The projected decline in spending, which accounts for two- thirds of the economy, foreshadows a holiday season that may be the worst in six years, according to industry projections. A record two-decade expansion in consumer spending ended in the third quarter, causing the economy to contract. Prices Inflation figures in Commerce's spending report may show price pressures have waned, giving way to the risk of deflation, or a prolonged slide in prices. The Federal Reserve's preferred gauge of inflation, which excludes food and energy costs, was unchanged in October after rising 0.2 percent in September. Orders for durable goods, products meant to last several years, likely fell 3 percent in October following a 0.9 percent increase the prior month, economists in the Bloomberg survey predicted. Excluding transportation equipment, orders probably fell 1.5 percent, the Nov. 26 report may show. Automakers are aggravating the slump in durables. Sales of cars and light trucks last month were the worst since February 1983, according to industry figures from Autodata Corp. The economy already was on a much weaker footing in the third quarter, revised figures from Commerce may show on Nov. 25. Gross domestic product likely shrank at a 0.5 percent annual rate from July to September, more than the advance estimate of a 0.3 percent contraction and the biggest slump since the 2001 recession, according to the survey median. Housing Downturn The housing downturn will probably extend into a fourth year as buyers find it difficult to get mortgage loans. S&P/Case-Shiller may report on Nov. 25 that an index of home prices in 20 U.S. cities slumped in September at the fastest pace on record, the survey median shows. New-home sales, due from Commerce on Nov. 26, plunged in October to the lowest level in 17 years, according to the median forecast in the Bloomberg survey. Two days earlier, the National Association of Realtors may report that home resales dropped last month by the most since September 2007. In other figures, the Institute for Supply Management- Chicago may report business activity in November stayed near the lowest level since the 2001 recession, and Reuters/University of Michigan may report consumer confidence this month held near a 28-year low, according to economists' median forecasts. AnnTaylor Stores Corp., the U.S. women's retailer known for its suits, on Nov. 21 said it won't give a profit forecast for the fourth quarter or full year because of the ``volatility and uncertainty'' about the economy heading into the holidays. Bloomberg Survey ================================================================ Release Period Prior Median Indicator Date Value Forecast ================================================================ Exist Homes Mlns 11/24 Oct. 5.18 5.00 Exist Homes MOM% 11/24 Oct. 5.5% -3.5% GDP Annual QOQ% 11/25 4Q P -0.3% -0.5% Personal Consump. QOQ% 11/25 4Q P -3.1% -3.1% GDP Prices QOQ% 11/25 4Q P 4.2% 4.2% Core PCE Prices QOQ% 11/25 4Q P 2.9% 2.9% Case Shiller Monthly YO 11/25 Sept. -16.6% -16.9% Case Shiller Monthly In 11/25 Sept. 164.6 163.0 Case Shiller Quarterly 11/25 3Q 155.3 151.5 Case Shiller Quarterly 11/25 3Q -15.4% -17.1% OFHEO HPI QOQ% 11/25 3Q -1.4% -1.5% OFHEO HPI MOM% 11/25 Sept. -0.6% -0.7% Consumer Conf Index 11/25 Nov. 38.0 38.0 Richmond Fed Index 11/25 Nov. -26 -26 ABC Conf Index 11/25 Nov. 24 -52 -53 Durables Orders MOM% 11/26 Oct. 0.9% -3.0% Durables Ex-Trans MOM% 11/26 Oct. -1.0% -1.5% Pers Inc MOM% 11/26 Oct. 0.2% 0.1% Pers Spend MOM% 11/26 Oct. -0.3% -1.0% PCE Deflator YOY% 11/26 Oct. 4.2% 3.3% Core PCE Prices MOM% 11/26 Oct. 0.2% 0.0% Core PCE Prices YOY% 11/26 Oct. 2.4% 2.2% Initial Claims ,000's 11/26 Nov. 22 542 531 Cont. Claims ,000's 11/26 Nov. 15 4012 4075 Chicago PM Index 11/26 Nov. 37.8 37.0 U of Mich Conf. Index 11/26 Nov. F 57.9 57.5 New Home Sales ,000's 11/26 Oct. 464 442 New Home Sales MOM% 11/26 Oct. 2.7% -4.7% ================================================================ To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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