Consumer spending adjusted for inflation in the U.S. rose in November by the most in almost two years, a sign that falling gasoline prices are giving Americans more cash to spend for the holidays. The 0.6 percent gain in purchases adjusted for prices was the first increase in six months and the biggest gain since December 2006, the Commerce Department said today in Washington. The Federal Reserve's preferred measure of inflation stagnated and incomes dropped. Plunging gasoline prices and discounts by retailers from Toys ``R'' Us Inc. to Wal-Mart Stores Inc. are keeping Americans spending as they head into the recession's second year. Still, the loss of more than 1.9 million jobs and record declines in home values have shaken confidence, indicating sales are unlikely to keep improving in coming months. ``The decline in gasoline prices is giving consumers the means to spend,'' Dean Maki, co-head of U.S. economic research at Barclays Capital Inc. in New York, said before the report. ``The pace of decline in real consumer spending is moderating.'' A separate Commerce report showed orders for durable goods in November fell 1 percent, less than anticipated. Excluding a slump in transportation gear, orders unexpectedly increased. Unadjusted for inflation, spending dropped 0.6 percent last month, a record fifth consecutive decline, Commerce said. The decline reflected a 1.1 percent plunge in prices that was the biggest since record began in 1992. Forecasts Economists forecast unadjusted spending would fall 0.7 percent, according to the median of 64 estimates in a Bloomberg News survey. Projections ranged from declines of 0.3 percent to 1.5 percent. Today's report also confirmed inflation is retreating as demand wanes. The price gauge tied to spending patterns increased 1.4 percent from November 2007, the smallest gain in six years. The Fed's preferred gauge of prices, which excludes food and fuel, was unchanged for the second consecutive month, the first time that's happened since 1999. The average price of unleaded regular gasoline at the pump fell by $1 to $2.11 in November from the prior month, according to AAA, leading the drop in overall prices. The decrease in nominal spending pushed the savings rate up to 2.8 percent from 2.4 percent in October. A positive rate suggests consumers are restraining spending to boost savings. Disposable income, or the money left over after taxes, increased 1 percent after adjusting for inflation. It was the biggest gain since May. Breakdown Today's report showed inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, increased 0.6 percent last month. Purchases of non-durable goods climbed 1.5 percent, and spending on services, which account for almost 60 percent of all outlays, rose 0.1 percent. Retailers are concerned about the holiday shopping season, which brings in one-third or more of annual revenue. The International Council of Shopping Centers and Goldman Sachs Group Inc. said yesterday in a joint statement that November-December sales may fall as much as 2 percent. The ICSC had previously projected a drop of as much as 1 percent. Sears Holdings Corp., the largest U.S. department-store company, this month abandoned its earnings forecast for the remainder of the year and posted a wider than forecast third quarter loss. ``Given the current economic and retail environment, we will carefully evaluate alternatives that provide financial flexibility in the near-term,'' interim Chief Executive Officer W. Bruce Johnson said in a statement. Consumer spending dropped at a 3.8 percent annual pace in the third quarter, the biggest plunge since 1980, revised Commerce figures showed yesterday. The economy shrank 0.5 percent. Economists surveyed by Bloomberg forecast the economy will contract through the first half of 2009.

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