Money world

Consumer spending in the U.S. probably rose in November for the sixth time in seven months as households took advantage of holiday discounting.

Purchases increased 0.7 percent for a second consecutive month, according to the median estimate of 72 economists surveyed by Bloomberg News. The report may also show incomes grew by the most in six months. Confidence and new-home sales probably also climbed, other reports may show.

Retailers such as Best Buy Co. are cutting prices on some items to help Americans overcome the worst employment slump in the post-World War II era and mounting foreclosures. Growing sales indicate consumers will contribute to, rather than hold back, the economic expansion in coming months.

“The U.S. consumer is mounting a comeback.,” said Chris Low, chief economist at FTN Financial in New York. “Despite a 10 percent unemployment rate, credit restrictions and political uncertainty, spending is growing again.”

The Commerce Department’s report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gains of 0.4 percent to 0.9 percent.

The report may also show incomes rose 0.5 percent last month, the biggest gain since May, according to the survey median. Estimates ranged from increases of 0.2 percent to 0.8 percent.

Auto dealers are among retailers seeing demand improve long after the government’s so called cash-for-clunkers plan expired. Cars and light trucks sold at a 10.9 million unit annual pace last month, up from a 10.5 million pace in October. Sales slumped in September, the month after the trade-in incentive ended.

More Discounting

Best Buy, the largest U.S. electronics retailer, is promoting notebook computers and $299 flat-screen televisions to lure consumers. As a result, the Richfield, Minnesota-based company will see its gross margin decline by as much as 1 percentage point in the fourth quarter, Chief Executive Officer Brian Dunn said on a Dec. 15 conference call with analysts.

The labor market remains a hurdle. The jobless rate is projected to exceed 10 percent through the first half of next year. Payrolls fell by 11,000 last month, bringing total job losses to 7.2 million since the recession began in December 2007, the most of any contraction since the Great Depression.

Consumer Confidence

Stock-market gains are boosting optimism among Americans. The Reuters/University of Michigan final reading on consumer sentiment for December, due about 10 a.m., is projected to climb to 73.8, its highest level since January 2008.

The Standard & Poor’s 500 Index yesterday closed at the highest level in almost 15 months after existing home sales in November topped forecasts. The National Association of Realtors said sales of previously owned houses rose 7.4 percent from the prior month to an annual pace of 6.54 million, the highest level in almost three years.

Another report from the Commerce Department today, due at 10 a.m., is forecast to show purchases of new homes rose 1.9 percent to a 438,000 annual pace last month, the highest level since August 2008, according to the survey median.

Source