Americans effectively stopped spending last month as the credit crisis and fears about home prices eroded their confidence, official figures indicated today.

According to data from the US Commerce Department in Washington, Americans spent the least for 17 months in February, rising by only 0.1 per cent.

Economists fear that the American consumer will continue to pare back spending because about 40 per cent of US economic growth is derived from spending on the high street and services.

Official numbers were endorsed today by JC Penney, the big discount department store chain, which gave warning that profits during the first quarter of the year would fall well below Wall Street expectations.

Wall Street was particularly gloomy about the confidence figures because, after stripping out inflation for food and fuel, spending stagnated last month.

Ian Shepherdson, chief US economist of High Frequency Economics, said: "Assuming real spending is more or less flat again in March, the quarter as a whole will see a 0.8 per cent increase, down from 2.3 per cent in the fourth quarter.

"The plunging confidence numbers clearly point to an outright decline in the second quarter."

Most of Wall Street is expecting that statistics will show that America is already in a recession, with unemployment running at slightly less than 5 per cent.

The prolonged slump in housing, rising redundancies, soaring energy costs and a severe credit crisis are taking their toll on consumer confidence.

All of these troubles are causing consumers to cut back on their purchases.

The 0.1 per cent gain in spending was in line with expectations.

Personal incomes rose by a better-than-expected 0.5 per cent in February, which was a surprise given that employers cut jobs for a second consecutive month in February.

Disposable income — the amount of money Americans have left after tax — rose by 0.5 per cent last month.

The personal savings rate — savings as a percentage of disposable income — edged up to 0.3 per cent, after tipping into negative territory in January.

Washington is hoping that its $150 billion (£75 billion) tax rebate plan, which will send cheques to 130 million Americans by June, will help to boost consumer spending.

Shares in JC Penney sank by 11 per cent after it said that profits for the first quarter would fall 37 per cent below Wall Street expectations.

It said that it expects first-quarter net income of about 50 cents a share, down from its previous forecast of between 75 cents and 80 cents a share.

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