The advance GDP report came in slightly better than expected for the third quarter of 2008, contracting by 0.3% against expectations of a 0.5% decline, according to the Bureau of Economic Analysis on Thursday. The previous month's 2.8% growth was unrevised.
The negative figure is the second decline in quarterly GDP since the credit crisis began in August 2007, as the final quarter of 2007 saw a 0.2% contraction.
Prior to the release, forecasts were abnormally varied for the Q3 report, ranging from -1.9% to +1.2%.
Personal consumption, which accounts for 70% of GDP in the U.S., contracted by 3.1% in the quarter, marking the first quarterly decline since 1990.
Also leading the slowdown was a 1.9% contraction in gross private investment, including a 19.1% cutback to residential spending and a 5.6% slowdown in fixed investment.
The report also showed a 14.1% contraction in durable goods and a 6.4% cut to nondurable goods.
Helping GDP growth was an 18.1% growth pace in national defence spending, an increase in government consumption to 5.8%, and continued expansion in exports at 5.9%.
The Bureau emphasized that the third-quarter 'advance' estimates are based on source data that are incomplete or subject to further revision by the source agency. The third-quarter 'preliminary' estimates, based on more comprehensive data, will be released on Nov. 25, 2008.
By Patrick McGee and edited by Nancy Girgis
©CEP News Ltd. 2008