Washington, Oct. 30 (Reuters): The US economy shrank at a 0.3 per cent annual rate in the third quarter, its sharpest contraction in seven years, as consumers cut spending and businesses reduced investment in the face of rising fears that recession was setting in.

The classical definition of recession is negative growth for two successive quarters. In the US, this has not been the case.

However, the country suffered negative growth twice in four quarters, reinforcing the belief that a recession is looming.