Consumer Spending Falls Less Than Expected

American consumers are refusing to retreat in the face of recession, continuing to spend modestly in the belief that the worst of the downturn is behind them, according to two new reports.

The Commerce Department said consumer spending fell 0.7% in November, largely reflecting an expected falloff in auto sales after a record-breaking October. Despite wide swings in consumer spending in recent months, consumer spending is at a higher level than it was before Sept. 11. Personal income fell 0.1% in November, the department said.

Separately, the University of Michigan said its index of consumer sentiment rose sharply in December for the third straight month. The index finished the year at 88.8, up sharply from the 81.1 recorded in September. A companion index of consumer expectations rose by a similar amount.

In another report, the Commerce Department revised its most comprehensive reading on the economy, the gross domestic product, for the third quarter. The economy shrunk by 1.3%, rather than the preliminary estimate of 1.1%, the biggest decline since the last recession a decade ago, it said.

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WASHINGTON POST