The US economy contracted at a 0.3% pace in the third quarter, the government said today in its first estimate of gross domestic product.
The drop in economic activity was the first since the fourth quarter of 2007 and comes with the world's biggest economy being hammered by a housing meltdown and credit crunch.
The decrease in activity - a sharp fall from the 2.8% growth rate of the second quarter - reflected weaker consumer and business spending and housing activity, offset in part by rising exports and government spending.
Consumer spending, the main driver of economic activity, fell 3.1% in the quarter on a sharp 14% plunge in spending on durable goods like cars and appliances expected to last three years or more.
In housing, which has seen a horrific meltdown after a long boom, investment fell 19.1%, a major drag on the economy.
