Signalling a full-blown recession in the world's largest economy, the US government on Thursday said its growth shrunk by 0.3 per cent in the third quarter as the consumer spending dipped by maximum in about three decades.After a growth of 2.8 per cent in the second quarter of this year, the real gross domestic product for the third quarter declined at an annual rate of 0.3 percent – the maximum since the last recession in 2001.Bureau of Economic Analysis (BEA) said the GDP fall was primarily due to negative contribution from consumer spending, residential fixed investment and equipment and software."Most of the major components contributed to the downturn in the real GDP in the third quarter," BEA said, adding that ‘a sharp downturn’ in consumer spending on durable and non- durable goods and a deceleration in exports were among the major factors.While a dip of 0.3 per cent was less than expectations, analysts said the fourth quarter could be even gloomier when the GDP could shrink by up to four per cent. There were expectations for a 0.5 per cent dip in the GDP in the third quarter.A drop of 3.1 per cent in consumer spending in Q3 - more than expected about 2.5 per cent fall - is said to be the first decline since 1991 and is the highest in about three decades or since 1980.The dip of 0.3 per cent in the US economy during the third quarter of this year is the biggest decline since a 1.4 per cent plunge in the third quarter of 2001 - the last time US economy was seen in a recession. If the GDP is reported to have registered a decline in the fourth quarter as well, it would mean an official recession for the US. A recession is technically defined as two consecutive quarters of fall in the GDP. The economists have said that the US could continue to be in a recession through the second half of 2008 and the first half of the next year. Even the US Federal Reserve has warned that the weakness in the country's economy could continue for some time. The latest data shows that the consumers as well as businesses both cut down considerably on their expenses to cope up with the crisis gripping the financial markets. BEA said that the ‘advance’ estimates showing a 0.3 per cent decline in the real GDP are subject to further revision and the ‘preliminary’ estimates for the third quarter, based on more comprehensive data would be released on November 25.
