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US economy declines amid recession fears

Ap
Wednesday 31 October 2001 01:00 GMT
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The US economy shrank at a 0.4 per cent rate between July and September, a decline that could signal that the country is in recession.

The drop in the gross domestic product – the total output of goods and services produced in the country – was the biggest since the first quarter of 1991 when the country was in the depths of the last recession, the Commerce Department reported today.

The weak performance reflected a sharp drop in consumer spending, which slowed to the weakest pace in more than eight years, and a continued plunge in investment by businesses in new plants and equipment.

Traditionally, a recession is defined as two consecutive quarters of declining GDP. However, the actual dating of a downturn is done by the National Bureau of Economic Research and is based on when a number of economic indicators in addition to the GDP turn negative.

Many analysts believe that the country had entered into a recession even before the 11 September attacks and when the NBER gets around to establishing the official date it will mark the downturn as beginning last April or May.

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