Spending, housing reports are mixed

WASHINGTON - Americans are starting to spend a bit more money, but not enough to power a strong economic recovery, according to the latest batch of data.

The Commerce Department said yesterday that consumer spending rose 0.5 percent in November for its second straight monthly gain. But new homes clearly were not on the shopping list. A separate report showed that new-home sales plunged unexpectedly to the lowest level since April.

The reports were evidence the recovery from the recession is proceeding in fits and starts. Still, economists said the activity was much improved from this time last year, when the United States was gripped by financial crisis.

"People are continuing to pay down their debts, and they remain concerned about their financial futures and whether they will have jobs," said Sal Guatieri, an economist at BMO Capital Markets. "Santa's toy bag won't exactly be brimming with goodies this year, but at least he will show up, unlike last year."

The Commerce Department report on spending also showed that Americans' income increased in November at the fastest rate in six months, though the 0.4 percent increase was less than economists expected. The income gain reflected a $16.1 billion increase in pay attributed to last month's drop in unemployment.

But consumers are still worried about job security, which weighs on decisions about big purchases like new homes.

The 11 percent slump in new-home sales from October's pace shows that consumers are taking their time after an extension of a deadline for first-time buyers to qualify for a federal tax credit. The incentive, worth up to $8,000, was set to expire at the end of November. But Congress pushed back the date to April 30 and expanded the program to include current homeowners who move.

The only strong region was the Midwest, where sales rose 21 percent. Sales fell 21 percent in the South, 9 percent in the West, and 3 percent in the Northeast.

The drop in November sales of new homes contrasted with sales of previously owned homes: On Tuesday, an industry group said sales of those homes rose 7.4 percent from October.