WASHINGTON — Evidence is mounting that the longest recession since World War II is losing its grip on the U.S. economy.

The latest hint is due today when the government releases data on consumer spending and income for July.

Personal spending is expected to post a modest gain for last month, driven higher by the popular Cash for Clunkers program. Economists expect personal spending rose 0.2 percent in July after a 0.4 percent gain in June.

Economists believe that personal incomes, the fuel for future spending increases, probably rose 0.2 percent as well, following a 1.3 percent decline in June.

Yesterday, a report confirmed that the economy shrank at an annual rate of just 1 percent in the spring.

Many analysts say growth likely returned in the current quarter. Smaller dips in consumer spending and other areas during the April-June period led some economists to raise their forecasts for the July-September quarter.

But with unemployment aid claims stubbornly high, Americans may benefit little from a recovery if jobs remain scarce and spending stays too low to fuel a strong rebound.

NATURAL GAS PRICES HIT 7-YEAR LOWS

NEW YORK — Natural gas prices slumped to their lowest level in seven years yesterday after the government reported that salt caverns, aquifers and other underground areas where it is stored are filling up.

Levels of natural gas have been building because power-intense industries like manufacturing have cut back severely on production.

Natural gas tumbled 6.7 cents to settle at $2.843 per 1,000 cubic feet. The price dropped as low as $2.692 per 1,000 cubic feet earlier in the day, a price not seen since Aug. 7, 2002.

BANK INSURANCE FUND DOWN 20%

WASHINGTON — The agency that guarantees bank deposits said yesterday there are no immediate plans to borrow money from the government to bolster its insurance fund, which has shrunk under the weight of collapsing banks.

The fund fell 20 percent to $10.4 billion in the second quarter as U.S. banks overall lost $3.7 billion, the Federal Deposit Insurance Corp. said.

That's the fund's lowest point since 1992 at the height of the savings-and-loan crisis. Some analysts have warned that the fund could fall below zero by year's end.

The FDIC estimates bank failures will cost the fund around $70 billion through 2013.

Eighty-one banks have failed so far this year, and hundreds more are expected to fall in coming years largely because of souring loans for commercial real estate.

TOYOTA PLANS TO CLOSE CALIF. PLANT

WASHINGTON — Toyota Motor Corp. plans to end production in March 2010 at a California joint venture where it has built vehicles with General Motors, the company said yesterday.

The decision would mean the shutdown of the sole auto assembly plant on the West Coast if no other carmaker should emerge to keep it going.

Toyota's board voted yesterday to end the company's production contract at the Fremont, Calif.-based New United Motor Manufacturing Inc., spokeswoman Cindy Knight confirmed.

Toyota had said previously that it was moving toward liquidating its stake in the California facility after the plant's fate was thrown into question in June when GM announced it was withdrawing from the 50-50 joint venture.