The US economy shrank at a 0.5 per cent annual pace in the third quarter as expected after consumers and businesses cut spending and the country's recession gathered steam, government data showed today.
The US economy entered a recession last December and many economists think this deepened after the failure of US investment bank Lehman Brothers in September, which froze credit and sent households and firms into a defensive crouch.
The Commerce Department, in its final revision, said the decline in gross domestic product in the third quarter versus the previous three months was the steepest since the third quarter of 2001, in the aftermath of the September 11th attacks on the United States.
Analysts polled by Reuters had predicted the report would show GDP declined by an unrevised 0.5 per cent in the third quarter.
Consumer spending shrank by 3.8 per cent for the sharpest pull-back since 1980, when a global oil crisis tipped the economy towards a prolonged slowdown, while investment in equipment and software slumped 7.5 per cent for the largest decline since early 2002.
Reuters