Consumer spending, after adjusting for inflation, rose in November by the most in almost two years as cheaper gasoline prices gave 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, the Commerce Department said today in Washington. The November gain in spending may prove short-lived because of the deteriorating job market and sliding value of households’ property and financial assets. Today’s report also showed that personal income fell in November, and other figures showed that first-time claims for unemployment insurance surged to a 26-year high. “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. Stock futures were little changed after today’s reports. The dollar remained lower, while Treasuries advanced. Futures on the Standard & Poor’s 500 Stock Index were up 0.2 percent at 859.90 at 8:43 a.m. in New York, benchmark 10-year note yields slipped to 2.15 percent from 2.18 percent late yesterday, and the dollar lost 0.5 percent against the euro to $1.3993. Durable Goods 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. 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. Savings Rate 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. Plunging gasoline prices and discounts by retailers from Toys “R” Us Inc. to Wal-Mart Stores Inc. kept some Americans spending in November even as they headed into the recession’s second year. 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. Holiday Forecast Even after the bump in November sales, 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 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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