By John S. McClenahen Having declined at an estimated 0.4% annual rate, the U.S. economy contracted less in this year's third calendar quarter than the National Assn. of Manufacturers (NAM) figured it would. But, "clearly our economy is in deep trouble," says David Huether, chief economist at the Washington-based NAM. "While the state of the economy in the fourth quarter will depend significantly on how Sept. 11 is affecting consumer spending, the main story in the third quarter is the continued decline in exports and investment," Huether contends. Spending on equipment and software fell at an annual rate of 11.8% in the third quarter, reveal "advance" GDP data from the U.S. Department of Commerce's Bureau of Economic Analysis. And "with orders down sharply in recent months, further declines in the next couple of quarters are almost certain, adds Bruce Steinberg, chief economist at Merrill Lynch & Co., New York. U.S. exports of goods and services, which declined by $49.3 billion (16.6%) in the third quarter, have the U.S. on track "to suffer the worst export percentage decline in history," laments NAM's Huether. "While part of this is due to sluggish growth overseas, the overvalued [U.S.] dollar, still 25% above its 1997 level, continues to deter U.S. exports," he asserts. Merrill Lynch's Steinberg figures that as more data become available the beginning of the current U.S. economic recession "will be backdated" to the April-June quarter of 2001. But he also calculates the recession will end in the first quarter of 2002, a projection that now seems optimistic. In the meantime, depending on how bad the October U.S. unemployment numbers are, Steinberg is suggesting that Chairman Alan Greenspan and his colleagues on the Federal Open Market Committee could cut the influential federal funds 50 basis points to 2% at their next scheduled meeting on Nov. 6. The jobless figures are slated for release by the U.S. Department of Labor on Friday, Nov. 2.