The US economy took its sharpest lurch yet towards recession, recording the biggest decline in growth in more than a decade, figures revealed last night.
Gross domestic product - the total output of goods and services produced in the United States, its broadest economic measure - shrank at an annual rate of 0.4 per cent in the third quarter from July to September, the Commerce Department said.
It was the biggest drop since the first quarter of 1991 when the US economy was mired in its last recession. The figures also confirmed that one of the longest economic expansions in US history had ended - GDP last contracted in the first quarter of 1993.
Falling consumer spending and business investment in plant and equipment contributed to the tumble, fuelled in part by the impact of the September 11 terrorist attacks on New York and Washington, many analysts believe.
GDP growth in the second quarter was just one per cent - the first hint for many that a recession was looming. The September 11 fallout is expected to continue, many analysts believe, and an even sharper decline - possibly as much as a one per cent fall - is expected in the October to December quarter. At that point, America will officially be in recession - after two consecutive quarters of negative growth.
Some government and private sector analysts fear the news will further cripple weak consumer demand, spending that accounts for two-thirds of all US economic activity. With Americans holding record levels of personal credit against historic lows in personal savings, any downturn could be bruising on the consumer front.
One prominent measure of consumer confidence sank to a seven-year low on Tuesday.
