NEW YORK, Oct 30: In a strongest sign that recession may have already begun in the United States, the US Commerce Department reported on Thursday that the gross domestic product fell at an annual rate of 0.3 per cent in the July-September period, a significant slowdown after a growth of 2.8 per cent in the prior quarter.

Coming just a day after the Federal Reserve slashed a key interest rate to battle an economic downturn, the report has sent shivers down the Wall Street and brokers are holding their breath with desperate trepidation as the market opened.

Many analysts believe the GDP will decline in the current October-December period by an even larger amount and they are forecasting a negative GDP figure in the first three months of next year.

Consumer spending, which accounts for two-thirds of the economy, dropped by the largest amount in 28 years in the third quarter.

According to one report the National Bureau of Economic Research, which is the official arbiter of recessions in this country, has not said when it will make its determination of whether the country has entered a recession.

The US labour department also reported that applications for unemployment benefits remained at an elevated level last week, another sign of economy’s struggles. The number of laid-off workers filing new claims totalled 479,000, the same as the previous week, disappointing analysts who had expected a small drop.

On Wednesday, the Federal Reserve Bank cut the federal funds rate by half a percentage point, and the government finally began distributing funds from the billions in the financial rescue package.