WASHINGTON — The housing market is tanking, the credit markets are in crisis, and economists fear a recession could be on the way — but in November at least, that wasn't enough to slow down the American consumer.

Personal spending rose 1.1 percent last month, the biggest gain in two years, the Commerce Department reported yesterday, as Americans apparently shrugged off the economic storm clouds that were darkening November.

Disposable personal income rose only 0.3 percent for the month, making for a negative savings rate. That means that families either dipped into their savings or took on more debt to keep buying goods and services.

The news raised hopes the economy will not slow too much in the coming months, driving the Dow Jones industrial average up 205 points, or 1.55 percent.

In surveys, consumers said they were sharply less confident about the state of the economy in November than they had been the month before. Consumer sentiment edged down again in December, according to a University of Michigan index released yesterday.

That wasn't enough to keep people out of stores. "Apparently Americans are really depressed so are compensating by going shopping," said David Wyss, chief economist of Standard & Poor's. "It's retail therapy."

Part of the gain was likely due to one-time quirks. Thanksgiving came early this year, so more holiday shopping than usual was pushed into November. And gasoline prices rose steeply; in the short run, consumers tend not to adjust how much gas they use or how much other stuff they buy because of such price increases, though that could change if the higher prices persist.

But the spending increase was so large, economists said, that those idiosyncrasies don't account for all of it. Even adjusted for inflation, spending rose 0.5 percent. The reading is stronger than other measures of how consumers are doing, but is consistent with retail sales numbers that show strong spending in November.

"For two years now, we've been talking about the idea that housing will get weak and that will affect consumer spending," said Neal Soss, chief economist of Credit Suisse. "That simply hasn't happened yet. "

There was more worrisome news in the report. Inflation accelerated, according to the personal consumption expenditure price index, with prices for up 0.6 percent in November. Leaders of the Federal Reserve prefer this measure of inflation.

Prices excluding food and energy costs, using this measure, are up 2.2 percent over the past year, suggesting that higher fuel costs are rippling through the economy.

The central bank meets again Jan. 30, and, based on prices in futures markets, investors believe there to be a 45 percent chance it will cut its benchmark federal funds rate by a quarter percentage point, a 35 percent chance it will take no action, and a 20 percent chance it will cut by half a percentage point or more.

The Fed has been particularly concerned that banks have become reluctant to lend each other money, increasing short-term borrowing costs for many consumers and businesses.

In response, the bank held two auctions of cash this week, of $20 billion each, aiming to pump liquidity into the system.

Make a difference. Donate to The Advertiser Christmas Fund.