The U.S. economy contracted in the third quarter of this year at an annual rate of 0.3 percent, signaling the country is likely heading into a recession, the Commerce Department reported Thursday.

This was the worst showing since the world's largest economy shrank at a pace of 1.4 percent in the third quarter of 2001, when the nation was suffering through its last recession.

The contraction came as nervous consumers cut back on their spending by 3.1 percent, the biggest amount in 28 years.

It marked the first drop in consumer spending, which accounts for two thirds of the country's overall economic activity, since late 1991, when the economy was coming out of a recession.

(Xinhua News Agency October 30, 2008)