The U.S. economy recorded a decline of 0.3 percent in the third quarter, marking the largest drop in seven years, due to a decrease in consumer spending and corporate investments. The decline in Gross Domestic Product (GDP) in the U.S. is the largest since the third quarter of 2001, but also less than the 0.5 percent that analysts had expected.
This represents a sharp turnaround, considering that in the second quarter, GDP grew by a relatively strong 2.8 percent. Consumer spending, which accounts for about two-thirds of U.S. GDP, fell by 3.1 percent, marking the first quarterly decline in American consumption since 1991, and the largest since 1980. Increased government spending partially offset the decline in consumer spending and investment. "The economy was supported in the past quarter by government spending, which contributed 1.1 percentage points to GDP growth," says Robert Brusca, chief economist at Fact And Opinion Economics. These data confirm the thesis that the U.S. economy is on the brink of recession. If GDP also records a decline in the current quarter, it will be an official confirmation of recession, defined as a decline in the economy for two consecutive quarters. (H)
