The U.S. Commerce Department says Thursday the country's Gross Domestic Product (GDP) - the value of all the goods and services produced in the United States - fell by 0.3 percent.
That is the sharpest contraction in seven years and a big change from the previous three-month period when the GDP grew by 2.8 percent. It also comes as consumer spending - a main driver of the U.S. economy - fell for the first time in about two decades. Business investment also declined.
A recession is technically defined as two consecutive three-month periods when the economy shrinks. But a growing number of economists say other statistics, including unemployment figures, show the U.S. is already in a recession.
The head of the White House Council of Economic Advisors says the country faces "a few tough months," but the actions taken to bolster the economy are starting to work. Edward Lazear also said the weak job market is a top concern.
A report by the U.S. Labor Department says the number of Americans who are getting unemployment aid rose to more than 3.7 million, close to a five-year-high.
Worries about jobs and the economy pushed European consumer and business confidence down to a 15-year low in October. The European Union survey showed the sharpest one-month drop on record. Economists watch consumer confidence for hints about consumer spending that drives much of the economy.
U.S. stocks rose sharply after the GDP figures were published, as investors were expecting the report to be even worse. European stock prices are mostly higher. Before the latest economic reports, Asian stock markets soared, with key indexes in Japan and Hong Kong gaining 10 percent or more.
The GDP figure comes just one day after the U.S. Federal Reserve, the U.S. central bank, cut its key interest rate by 0.5 percent in an effort to encourage lending and boost the economy.
Other countries also have been cutting interest rates and taking other actions.
Earlier today, Japan unveiled a nearly $300 billion economic stimulus package. Japanese Prime Minister Taro Aso says it includes tax cuts and loans to help small businesses.
And a leading German politician, Peter Struck of the Social Democratic Party, tells a German newspaper the government is preparing to introduce a range of measures - worth billions of dollars - to bolster the economy.
Some information for this report was provided by Bloomberg. By VOA News
