Spending Dive Sends GDP Down

The US economy shrank less than expected in the third quarter but still suffered the biggest contraction since the 2001 recession, reports Bloomberg. The gross domestic product fell 0.3%, led by the first fall off of consumer spending in two decades. The figure, out from the Commerce Department this morning, beat the forecast 0.5% annual rate but nevertheless rang alarm bells among economists who warned a prolonged recession is likely.

“The fourth quarter is going to be much worse as the crescendo of financial disruption reached a high point this month,” said one economist. Consumer spending was off 3.1%, more than expected and the most since 1980, reports the Wall Street Journal. Durable goods purchases were off 14.1%, and housing investment plunged 19.1%. "The crisis really kicked up in late September," said an analyst.
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