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Sales are ``reflecting the many strains on consumers,'' said Drew Matus, senior economist at Lehman Brothers Holdings Inc. in New York. ``We expect the Fed to cut rates to 1.5 percent by early 2009.''

Auto purchases in February were little changed from a three-year low reached in January, according to industry figures last week. Retail sales excluding automobiles also increased 0.2 percent after a 0.3 percent January gain, according to the Bloomberg survey.

Sales at chain stores in February increased more than forecast, as consumers suffering from higher fuel bills and the slump in hiring rushed to discounters such as Wal-Mart Stores Inc., according to figures from the International Council of Shopping Centers issued last week.

Confidence Wanes

``It does seem like this consumer sentiment is continuing to be affected by housing and credit,'' Richard Wagoner, chief executive officer of General Motors Corp., said in a Bloomberg Television interview March 4. ``I honestly can't tell you when and if we're going to see things turn back this year.''

Ethan Harris at Lehman Brothers and Bruce Kasman at JPMorgan Chase & Co. were among economists last week who said the U.S. had already fallen into a recession after the Labor Department reported the economy lost 63,000 jobs in February. They joined colleagues at Merrill Lynch & Co., Goldman Sachs Group Inc. and Morgan Stanley who had previously made a similar call.

The decline in payrolls was the second in a row and the biggest since March 2003.

``It's another nail in the consumer's coffin,'' said Josh Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.

16-Year Low

Weaker job growth, the biggest declines in home prices in at least 20 years and energy costs at record highs have shaken Americans' confidence. Consumer sentiment probably fell this month to the lowest level in 16 years, economists project a preliminary report from Reuters/University of Michigan on March 14 will show.

A Labor Department report on the same day may show prices paid by consumers rose 0.3 percent in February, according to the Bloomberg survey median, after a 0.4 percent gain the prior month. Excluding food and energy, so-called core prices probably increased 0.2 percent after a 0.3 percent gain the prior month.

Even as growth is slowing, inflation remains a concern for Fed policy makers as crude oil prices continue to rise, reaching an intraday record of $106.54 a barrel last week.

Bigger Risk

Still, some Fed policy makers have reiterated in recent weeks that slowing growth is the greater risk to the economy.

The Fed ``will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,'' Fed Chairman Ben S. Bernanke said in testimony to Congress Feb. 27.

Traders are virtually certain the central bank will lower the benchmark rate by three-quarters of a percentage point at its March 18 meeting, according to futures markets. A month ago, the odds of a cut that large were only about 25 percent.

Also next week, the Commerce Department on March 11 may report the trade deficit in January widened to $59.6 billion, according to a Bloomberg survey, from $58.8 billion in December, as higher oil prices boosted the cost of oil imports.

Bloomberg News ================================================== Release Period Prior Median Indicator Date Value Forecast ================================================== =============== Whlsale Inv. MOM% 3/10 Jan. 1.1% 0.5% Trade Balance $ Blns 3/11 Jan. -58.8 -59.6 Federal Budget $ Blns 3/12 Feb. -120.0 -165.0 Import Prices MOM% 3/13 Feb. 1.7% 0.8% Import Prices YOY% 3/13 Feb. 13.7% 14.6% Retail Sales MOM% 3/13 Feb. 0.3% 0.2% Retail ex-autos MOM% 3/13 Feb. 0.3% 0.2% Initial Claims ,000's 3/13 9-Mar 351 355 Cont. Claims ,000's 3/13 2-Mar 2831 2835 Business Inv. MOM% 3/13 Jan. 0.6% 0.5% CPI MOM% 3/14 Feb. 0.4% 0.3% Core CPI MOM% 3/14 Feb. 0.3% 0.2% CPI YOY% 3/14 Feb. 4.3% 4.3% Core CPI YOY% 3/14 Feb. 2.5% 2.4% U of [bn:PRSN=1] Mich Conf []. Index 3/14 March P 70.8 69.0 ================================================== =============

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

Last Updated: March 9, 2008 08:59 EDT