Purchases were unchanged, following a 1.2 percent gain in November, according to the median estimate in a Bloomberg survey before the Commerce Department's Jan. 15 report. Other reports may show residential construction fell and inflation eased.
Consumer spending, which accounts for 70 percent of the economy, is forecast to cool rather than collapse as the housing slump deepens, helping sustain the expansion for a seventh year. Smaller price increases may ease concern over inflation, giving Federal Reserve policy makers more reason to lower the target interest rate again this month to prevent recession.
``As we begin 2008, significant headwinds are ever present for the consumer,'' said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. ``We continue to believe the economy will escape an actual downturn.''
Retail sales excluding automobiles decreased 0.1 percent after a 1.8 percent rise in November that was the biggest in almost two years, according to the Bloomberg survey median.
Consumer spending is forecast to grow at an annual rate of 1.6 percent this quarter, down from an estimated 2.6 percent pace in the last three months of 2007, according to the median estimate of economists surveyed by Bloomberg News this month. Spending expanded at an average 3.5 percent pace per quarter over the past decade.
Sustained Expansion
Combined with exports, consumer spending will help the world's largest economy expand 2.1 percent in 2008, economists said.
Discounters are benefiting as Americans turn more frugal. Wal-Mart Stores Inc., the world's largest retailer, said Jan. 10 that its December sales were within its forecast after it lured shoppers with price cuts on more holiday items.
Purchases at chain stores in November-December rose at the slowest pace in five years, according to the International Council of Shopping Centers.
The real-estate recession is entering its third year as sales and property values continue to slide. The slump is likely to ripple through the economy as spending weakens and builders and financial firms fire more workers.
A Commerce Department report Jan. 17 may show housing starts in December fell to a 1.145 million unit annual pace, the lowest since 1993, from a 1.187 million rate in November, according to the survey median. Declines in construction will continue to hurt the economy after detracting from growth for the past eight quarters, economists said.
Mortgage `Problems'
``The demand for housing seems to have weakened further, in part reflecting ongoing problems in mortgage markets,'' Fed Chairman Ben S. Bernanke said Jan. 11.
Bernanke pledged ``substantive additional action'' to insure against ``downside risks'' to the expansion, prompting Lehman Brothers Holdings Inc. and other securities firms to boost their forecast for a Fed rate cut to half a percentage point from a quarter point at the next meeting this month.
Consumer prices rose 0.2 percent in December after a 0.8 percent gain in November that was the highest in more than two years, according to the median forecast ahead of the Labor Department's Jan. 16 report. Excluding food and energy, prices rose 0.2 percent, after a 0.3 percent gain.
Smaller increases in prices will give the Fed room to cut rates. Investors are certain the Fed will lower the benchmark interest rate by at least a half percentage point following two days of meetings on Jan. 29-30.
Other figures this week will show industrial production and consumer confidence weakened. Output at the nation's factories, mines and utilities dropped 0.2 percent last month, the Fed is projected to report Jan. 16.
The Reuters/University of Michigan preliminary index of consumer sentiment for this month, due Jan. 18, will fall to 74.5, a two-year low, from 75.5 at the end of December, according to the survey.
Bloomberg Survey
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Release Period Prior Median
Indicator Date Value Forecast
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PPI MOM% 1/15 Dec. 3.2% 0.2%
Core PPI MOM% 1/15 Dec. 0.4% 0.2%
PPI YOY% 1/15 Dec. 7.2% 7.1%
Core PPI YOY% 1/15 Dec. 2.0% 2.0%
Retail Sales MOM% 1/15 Dec. 1.2% 0.0%
Retail ex-autos MOM% 1/15 Dec. 1.8% -0.1%
Empire Manu. Index 1/15 Jan. 10.3 10.0
Business Inv. MOM% 1/15 Nov. 0.1% 0.4%
CPI MOM% 1/16 Dec. 0.8% 0.2%
Core CPI MOM% 1/16 Dec. 0.3% 0.2%
CPI YOY% 1/16 Dec. 4.3% 4.1%
Core CPI YOY% 1/16 Dec. 2.3% 2.4%
Ind. Prod. MOM% 1/16 Dec. 0.3% -0.2%
Cap. Util. % 1/16 Dec. 81.5% 81.2%
Housing Starts ,000's 1/17 Dec. 1187 1145
Building Permits ,000's 1/17 Dec. 1162 1135
Initial Claims ,000's 1/17 Jan. 13 322 334
Cont. Claims ,000's 1/17 Jan. 6 2702 2705
Philly Fed Index 1/17 Jan. -1.6 -1.0
U of Mich Conf. Index 1/18 Jan. F 75.5 74.5
LEI MOM% 1/18 Dec. -0.4% -0.1%
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