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|Thursday, November 01, 2001, updated at 08:57(GMT+8)|
U.S. 3rd-Qtr GDP Sees 1st Fall in More Than 8 YearsThe U.S. economy shrank for the first time since early 1993 in the third quarter of this year due mainly to slower growth in personal consumption in the wake of the Sept. 11 terrorist attacks, the Commerce Department said Wednesday.
Real U.S. gross domestic product (GDP) for July-September contracted at an annualized rate of 0.4%, the department said in an advance report.
This represented the first GDP fall since the January-March quarter of 1993, when the economy shrank 0.1%. The margin of decline is the biggest since the first quarter of 1991, when GDP dropped 2.0%.
In the second quarter of this year, GDP -- total economic output within U.S. borders -- grew a meager 0.3%. The third-quarter GDP figures will be revised twice more.
The latest GDP data have increased the possibility that the U.S. economy will slip into recession -- defined as at least two consecutive quarters of negative GDP readings -- for the first time since the recession observed from the July-September period of 1990 through the January-March quarter of 1991.
In response to the dismal GDP data, President George W. Bush urged Congress on Wednesday to quickly approve an economic stimulus package.
''The Congress needs to pass a stimulus package and get it to my desk before the end of November,'' he said in a speech to the National Association of Manufacturers board of directors.
Treasury Secretary Paul O'Neill said the U.S. economy could show positive growth in the fourth quarter if lawmakers pass the stimulus package soon.
''I think if we can get this stimulus bill in place quickly there's still a plausible argument that the fourth quarter could be mildly positive,'' he told reporters.
The Commerce Department attributed the third-quarter GDP fall mainly to a deceleration in personal consumption, a larger decrease in exports and the continued sluggishness in corporate capital spending.
This underscored the fact that the terrorist attacks are adversely affecting the already weak U.S. economy, making individuals reluctant to spend more on goods and services.
The GDP report said personal consumption, which accounts for two-thirds of U.S. GDP, rose only 1.2% in the July-September period after increasing 2.5% in the second quarter.
The third-quarter increase marked the smallest rise since the first quarter of 1993, when personal consumption rose 0.8%.
Corporate investment in plant and equipment, another key force behind economic expansion, dropped 11.9%, following a 14.6% decline in the April-June period.
With the latest GDP figures, the Federal Reserve is expected to further reduce a key short-term interest rate at its next policy-setting meeting Tuesday to keep recession at bay.
The Fed has already cut its target for the federal funds overnight lending rate nine times this year by a total of 4.0 percentage points.
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