(1888PressRelease)
November 06, 2008 - London, Data from the Commerce Department revealed that the gross domestic product (GDP) shrank at a 0.3 percent annual rate in the third quarter -the sharpest contraction in seven years.
The third-quarter contraction represents a considerable slow-down from the second quarter’s growth of 2.8 percent brought on by the government’s economic stimulus program of $168 billion.
Consumer spending which accounts for two-thirds of the US economy fell by 3.0 percent- the largest amount in 28 years. The report showed that spending on durable goods like cars and furniture fell at a 14.1 percent annual rate in the third quarter. Spending on nondurable goods like food and paper products shrank at fastest pace since late 1950. Dropping values of stocks and house prices, and a high rate of job loss means that the American consumer is feeling the effects of the economic downturn.
A report from the Labour department revealed that weekly claims for new unemployment benefits remained unchanged at a 479,000 last week indicating sluggish hiring. The US economy has in the past nine months slashed 750,000 jobs, with major corporates announcing job cuts every week. In a sign of times to come, businesses cut investment spending for the first time since the end of 2006.
Even as the White House conceded that the economy had "weakened substantially," economists continue to debate if the US economy has entered a recession. The official arbiter of recession in the country- The National Bureau of Economic Research has yet to announce its position on the country’s economic state.
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