WASHINGTON — The U.S. economy shrank in the third quarter faster than previously estimated as consumer spending plunged by the most in almost three decades.
Gross domestic product contracted at a 0.5 percent annual pace from July through September, the most since the 2001 recession, according to revised figures Tuesday from the Commerce Department in Washington. The government’s advance estimate issued last month showed a 0.3 percent decline.
The world’s largest economy has sunk into an even deeper recession this quarter as the credit crunch, the worsening housing market and mounting job losses cause consumers and businesses to retrench. President-elect Barack Obama on Monday warned that the U.S. may lose “millions of jobs” if the federal government does not quickly enact an economic-stimulus package.
“We’ve got a big downdraft coming on,” John Silvia, chief economist at Wachovia Corp. in Charlotte, N.C., said before the report. “The recession is certainly looking longer and deeper. It’s just getting very tough for consumers.”
U.S. stock-index futures rallied after the Federal Reserve committed up to $800 billion in new funding to unfreeze credit for homebuyers, consumers and small businesses.
Tuesday’s GDP report is the second of three estimates.
