WORLD> America
US economy contracts in Q3
(Xinhua)
Updated: 2008-10-31 00:08

WASHINGTON -- The US economy contracted in the third quarter of this year at an annual rate of 0.3 percent, signaling the country is likely heading into a recession, the Commerce Department reported Thursday.

This was the worst showing since the world's largest economy shrank at a pace of 1.4 percent in the third quarter of 2001, when the nation was suffering its last recession.

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The contraction came as nervous consumers cut back on their spending by 3.1 percent, the biggest amount in 28 years.

It marked the first drop in consumer spending, which accounts for two thirds of the country's overall economic activity, since late 1991, when the economy was coming out of a recession.

In the July-to-September period, consumers cut back on purchases of cars, furniture, household appliances, clothes, etc.

Meanwhile, businesses cut their spending on equipment and software at a rate of 5.5 percent, the highest since the first quarter of 2002.

Residential spending plunged by 19.1 percent in the third quarter, marking the 11th consecutive quarterly decline.

Exports of goods and services, a major force behind the economic growth, slowed in the third quarter, due to less demand from overseas buyers who are coping with their own economic problems.

The nation's exports grew by 5.9 percent in the third quarter, a sharp deceleration from the 12.3 percent growth rate in the second quarter.