Purchases fell 2.8 percent in October, the fourth straight decline, the Commerce Department said today in Washington. Labor Department figures showed import prices dropped 4.7 percent, pointing to a rising danger of deflation, and a private report said consumer confidence this month remained near the lowest level since 1980.
"The weakness in growth is intensifying and inflation pressures have evaporated,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who accurately projected the decline in sales. "Deflation is a word that will be increasingly used over the coming months.''
Spending may continue to falter as mounting job losses, plunging stocks and falling home values leave household finances in tatters. Retailers from Best Buy Co. to J.C. Penney Co. are cutting profit forecasts ahead of the year-end holiday shopping season, when many stores do most of their business.
Federal Reserve Chairman Ben S. Bernanke said at a conference today in Frankfurt that continuing strains in financial markets and recent economic data "confirm that challenges remain.''
The Fed chief said central bankers worldwide ``stand ready to take additional steps'' as warranted. Economists surveyed by Bloomberg News predict the Fed will lower its benchmark interest rate to a record 0.5 percent by March from the current 1 percent. Policymakers next gather in Washington Dec. 16.