WASHINGTON (Reuters) - The economy shrank more severely during the third quarter than first estimated as consumers cut spending at the steepest rate in 28 years, according to a Commerce Department report on Tuesday that underlined how rapidly activity was slowing.
Corporate profits fell for a second straight quarter and business investment fell, the department said as it revised the annual rate of decline in third-quarter gross domestic product to 0.5 percent from 0.3 percent that it reported a month ago. It was the sharpest fall in GDP since the third quarter of 2001 when the terror attacks against the United States took place.
Many analysts consider the United States has already joined Europe in recession, though it will take another quarter of contraction to meet a widely used definition for it -- back-to-back quarters of declining output. The third-quarter decline was a striking contrast with the second quarter's relatively brisk 2.8 percent rate of growth.
The U.S. decline is predicted to accelerate in the fourth quarter and last into 2009.
(Reporting by Glenn Somerville, Editing by Chizu Nomiyama)
