Orders for U.S. durable goods fell in December for a fifth consecutive month, signaling a slump in business spending will deepen and prolong the now 13-month recession. The 2.6 percent drop was larger than forecast and followed a 3.7 percent decrease the prior month that was larger than previously estimated, the Commerce Department said today in Washington. Excluding transportation equipment, orders decreased 3.6 percent, also more than anticipated. Companies from General Motors Corp. to Caterpillar Inc. are cutting back as a lack of credit and mounting job losses cause consumers to retrench and the worst global downturn in the postwar era stunts demand from overseas. The Federal Reserve yesterday said it was ready to expand efforts to unclog lending, just as the Obama administration works to pass a stimulus plan. ``The demand for durable goods has collapsed,'' Steven Wood, president of Insight Economics LLC in Danville, California, said before the report. ``Deepening recessions, both at home and abroad, are also dampening new orders.'' Economists projected a 2 percent drop, according to the median of 75 estimates in a Bloomberg News survey, after a previously reported 1.5 percent decline in November. Forecasts ranged from a decline of 6 percent to a gain of 1.3 percent. Excluding transportation equipment, orders were forecast to fall 2.7 percent. For all of 2008, orders for durable goods slumped 5.7 percent, the biggest decrease since the 2001 recession. Influence on Growth Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, decreased 2.8 percent and the previous month's gain was revised down. Shipments of those items, used in calculating gross domestic product, rose 0.9 percent after falling a greater-than-previously estimated 1.4 percent in November. Automobile bookings decreased 5.2 percent and orders for commercial aircraft dropped 44 percent. Boeing Co., the world's second-biggest commercial-airplane maker, yesterday said a drop in travel and tight credit signals customers may continue to cancel or defer orders in 2009. The Chicago-based company reported a fourth-quarter loss and said it plans to cut 10,000 jobs. It also disclosed that a customer canceled all 15 of its orders for the new 787 Dreamliner plane. The U.S. economy contracted at a 5.5 percent annual pace last quarter, the worst performance since 1982, after shrinking at a 0.5 percent pace in the previous three months, economists project a Commerce report tomorrow will show. A slump in business investment, together with continued declines in consumer spending and housing, accounted for the deterioration. Fed Plans The Fed yesterday left the benchmark interest rate as low as zero and said it was prepared to purchase Treasury securities to resuscitate lending should circumstances warrant such action. Policy makers also warned that inflation may recede too quickly and that downside risks to growth ``are significant.'' GM, which already closed most of its 22 plants in North America this month, said it'll eliminate shifts in the second quarter at plants in Ohio and Michigan, cut about 2,000 jobs, and reduce output at 13 other U.S. and Canadian factories. Chrysler LLC, Ford Motor Co. and Toyota Motor Corp. are also scaling back North American production. Ford, the only U.S. automaker not tapping federal loans, said today it used up $5.5 billion in cash in the fourth quarter and will tap a revolving credit line after the worst annual performance in its 105-year history. Today's report also showed demand slumped for metals, machinery and computers. Slump Overseas Exports are declining as the global economy faces the first simultaneous recession in the U.S., Japan and the euro region in the postwar era. The International Monetary Fund yesterday projected financial losses worldwide will swell to $2.2 trillion, double the current count, almost bringing economic growth this year to a halt. Caterpillar, the world's largest maker of bulldozers and excavators, said this week it is cutting 20,000 jobs and profit this year may trail analysts' average forecast. The Peoria, Illinois-based company cited ``significant order cancellations'' in the fourth quarter. ``We are expecting recessionary conditions to persist in most of the world throughout the year,'' Chief Executive Officer Jim Owens said on a conference call with analysts, adding the company is looking at ``seismic adjustments'' in 2009 sales and revenues. Unfilled orders last month dropped 1.3 percent, the biggest decrease since October 2002, today's report also showed. The decrease indicates manufacturing will be slow to rebound even after the economy starts to recover.

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