US consumer spending falls in December

Bloomberg

The 1 percent drop in purchases prices was larger than forecast and followed a 0.8 percent decrease in November, the Commerce Department said yesterday in Washington. The Federal Reserve's preferred measure of inflation was little changed for a third month.

The loss of almost 2.6 million jobs last year and record declines in home values have shaken confidence, indicating sales and prices are likely to keep retreating. President Barack Obama is pushing Congress to approve a stimulus package that includes tax cuts intended to boost consumer spending.

Yesterday’s report raises more concerns about deflation as prices cool. The price gauge tied to spending patterns increased 0.6 percent from December 2007. The Fed's preferred gauge of prices, which excludes food and fuel, was up 1.7 percent from December 2007, the smallest gain in almost five years. Consumer spending rose 3.6 percent for all of 2008, the smallest gain since 1961. U.S. companies are slashing prices to attract shoppers during the recession, a move that is dragging down profits.

EBay, the world’s biggest Internet auctioneer, reported its first quarterly decline on Jan. 22. Revenue fell 6.6 percent to $2.04 billion