Washington D.C. The Commerce Department reported Friday that consumer spending dropped by 0.3% in September, the biggest setback since June 2004. It followed two months in which spending was flat and left activity for the quarter falling by the biggest amount in 28 years.
The weakness in consumer spending, which accounts for two-thirds of total economic activity, dragged the overall economy down in the third quarter.
The gross domestic product, the broadest measure of economic health, also fell by 0.3% in the third quarter, the strongest signal yet that the country has fallen into a recession.
In a separate report, the Labor Department on Friday said the wages and benefits of U.S. workers rose by a moderate 0.7% in the third quarter, the same increase as in the previous two quarters. The report provided more evidence that the weak economy is keeping a lid on wage pressures.