Business news with words economists+inflation+recession. 4 news.

CONSUMER spending in the United States rose more than forecast in November, allaying concern that the slowest shopping season in five years may have already pushed the economy into recession. Purchases gained 1.1 percent after a 0.4 percent increase in October that was more than previously estimated, the US Commerce Department said on Friday in Washington, according to Bloomberg News. Incomes also advanced, while the Federal Reserve's preferred measure of inflation accelerated. While the gain in November spending was the biggest in more than two years, it preceded reports by retailers that warned of a slump in purchases. A private report on Friday showed consumer confidence slid to the lowest level in more than two years in December. Economists forecast spending would rise 0.7 percent, after an originally reported 0.2 percent increase in October.

A quarter-point rate cut led to a big sell-off on the stock market. Economists are split on what's the bigger threat: inflation or recession.

COMMODITIES had the biggest monthly gain in September in 32 years, led by wheat, crude oil and gold, as the US dollar's slump enhanced the appeal of energy, grains and precious metals as a hedge against inflation. The 19-commodity Reuters/Jefferies CRB Index was up 8.1 percent last month, the most since July 1975. Wheat climbed to a record in September amid a global grain shortfall, boosting corn and soybeans. Oil also hit a record, and gold reached a 27-year high. The Federal Reserve cut borrowing costs to bolster the American economy, sending the US dollar tumbling. "The Fed has signaled pretty clearly that (it) will answer the problem of a slowing economy with greater liquidity," said Chip Hanlon, who manages US$1 billion at Delta Global Advisors Inc in Huntington Beach, California. "We're in a bullish phase for commodities." The CRB Index rose to 333.67 from 308.76 on August 31. Wheat reached a record US$9.5125 a bushel on Friday. Crude oil climbed to US$83.90 a barrel, the highest ever, on September 20 and approached the record on Friday. Gold rose as high as US$752.80 an ounce on Friday, the highest since January 1980. The US dollar fell to a record against a weighted basket of six major currencies, including the euro, yen and pound. The Fed on September 18 cut its benchmark rate by 0.5 percentage point, more than economists forecast, to 4.75 percent in an attempt to shore up an economy threatened by a housing recession, according to Bloomberg News. The rate cut sparked inflation concerns. Some investors buy commodities to hedge against rising consumer prices, and the falling dollar makes raw materials priced in the United States currency cheaper for buyers holding other currencies. The cut in US borrowing costs will continue to weaken the dollar and lead to "skyrocketing" prices for commodities, Jim Rogers, chairman of Beeland Interests Inc, said in an interview last week. He co-founded the Quantum Hedge Fund with George Soros in the 1970s. Wheat rose on Friday after the US Department of Agriculture said US production and supplies were smaller than analysts expected. Global inventories are poised to decline to the lowest level in 26 years. Wheat futures for December delivery rose six US cents, or 0.6 percent, to US$9.39 a bushel on the Chicago Board of Trade. The price was up 22 percent this month and has more than doubled in the past 12 months.

We could be on the cusp of a big recession, as Paul B. Farrell argues. We could be coasting into a soft landing in which economic growth merely slows and then picks up again somewhere down the line, as some economists contend. We could still even be in the Goldilocks economy in which jobs are plentiful and inflation low and all those nasty things you hear about mortgages and credit will blow away like a brief summer shower, as ... well, it seems only the White House wants to embrace that view.