WASHINGTON (MarketWatch) -- With mounting job losses and pervasive gloom among consumers, the Commerce Department reported Wednesday that consumer spending fell 1% in October, the largest decline since September 2001.

The result matched analysts' expectations. Real consumer spending, which is adjusted for inflation, fell 0.5%.

Personal income rose 0.3% in October after a 0.1% gain in September. Analysts were looking for a 0.1% income gain for October. Real disposable income, or after-tax income adjusted for inflation, rose 1% in October.

As expected by analysts, the core personal-consumption expenditure price index was unchanged in October. This index gained 0.2% in September, and is up 2.1% in the past year.

On Tuesday, the Conference Board reported that persistent job worries pinned down consumer confidence in November at relatively low levels. Further, consumers' plans were lower for buying automobiles, homes and major appliances.

The spending downturn may be picking up steam. The Commerce Department reported Tuesday that consumer spending declined 3.7% in the third quarter -- the first drop in 17 years, and the largest in 28 years.

"Spending was also negatively impacted by tight credit conditions and further sharp declines in net household worth," wrote Brian Bethune, U.S. economist with IHS Global Insight. "Overall conditions for consumer spending in the fourth quarter are challenging, to say the least. ... The economy is now gripped in the worst phase of the recession."

With the holiday-shopping season looming, the Federal Reserve announced a plan on Tuesday to help increase lending to consumers and small businesses by backing credit-card and auto loans, along with other debt.