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Growth figure points to US gloom Data shows sharper US contraction
(30 minutes later)
The US economy contracted at an annual rate of 0.5% from July to September, according to revised official data.The US economy contracted at an annual rate of 0.5% from July to September, according to revised official data.
The initial estimate had put the rate of decline at 0.3%. The new figure was in line with market expectations.The initial estimate had put the rate of decline at 0.3%. The new figure was in line with market expectations.
The US Commerce Department said the downward revision was due to the biggest fall in US consumer spending in 28 years.The US Commerce Department said the downward revision was due to the biggest fall in US consumer spending in 28 years.
In another sign of a looming recession, figures showed home prices in the US had dropped by a record annual rate.In another sign of a looming recession, figures showed home prices in the US had dropped by a record annual rate.
The Standard & Poor's/Case-Shiller US National Home Price Index fell 16.6% from July to September compared with the same period a year ago.The Standard & Poor's/Case-Shiller US National Home Price Index fell 16.6% from July to September compared with the same period a year ago.
US home prices are now at levels not seen since the beginning of 2004.US home prices are now at levels not seen since the beginning of 2004.
At the same time, the Conference Board, a private research firm, said its Consumer Confidence Index rose in November to 44.9 from 38.8, the lowest level on record, in October.
Profits fallProfits fall
Consumer spending fell even more than was first announced so that's bad news especially because all the evidence is that it's still falling in the fourth quarter Nigel Gault, Global Insight
Many economists believe the US economy is already in recession, along with the eurozone and Japan.Many economists believe the US economy is already in recession, along with the eurozone and Japan.
Last week, analysts surveyed by the National Association for Business Economists said the US recession was set to continue into 2009.Last week, analysts surveyed by the National Association for Business Economists said the US recession was set to continue into 2009.
A separate survey by the Philadelphia Federal Reserve Bank also said the recession would last for 14 months.A separate survey by the Philadelphia Federal Reserve Bank also said the recession would last for 14 months.
An economy is considered to be in recession after two back-to-back quarters of declining gross domestic product (GDP). In the second quarter the US economy expanded by 2.8%.An economy is considered to be in recession after two back-to-back quarters of declining gross domestic product (GDP). In the second quarter the US economy expanded by 2.8%.
The reported third quarter 0.5% fall in GDP is the biggest since the third quarter of 2001, when the 11 September attacks took place.The reported third quarter 0.5% fall in GDP is the biggest since the third quarter of 2001, when the 11 September attacks took place.
The US Commerce Department also said that corporate profits fell for a second quarter in a row.The US Commerce Department also said that corporate profits fell for a second quarter in a row.
Analysts were not surprised by the GDP data, but instead paid attention to revised consumer spending and corporate profit figures.Analysts were not surprised by the GDP data, but instead paid attention to revised consumer spending and corporate profit figures.
"Consumer spending fell even more than was first announced so that's bad news especially because all the evidence is that it's still falling in the fourth quarter," said Nigel Gault at Global Insight."Consumer spending fell even more than was first announced so that's bad news especially because all the evidence is that it's still falling in the fourth quarter," said Nigel Gault at Global Insight.