U.S. GDP Drops 0.5%

Sharp contrast to 2.8% growth in Q2

Economic activity in the U.S. contracted at a 0.5% pace in the third quarter, according to government data.

The third quarter saw an abrupt turn from GDP growth of 2.8% in the second quarter, although analysts said that figure was skewed by a surge in exports and consumer spending boosted by one-time tax rebates.

The report on gross domestic product (GDP) for the July-September quarter is believed to be the start of a steep downturn for the world's largest economy that intensified in the past few months.

Many economists say the downturn in the fourth quarter could be much worse, reflecting a credit crunch and ongoing woes in housing and manufacturing.

The first estimate for fourth-quarter GDP is due in late January.

Copyright Agence France-Presse, 2008

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