The US economy is on the brink of officially entering recession after a slump in Americans’ consumer spending saw its gross domestic product (GDP) decline for the first time since the aftermath of the terrorist attacks of September 11, 2001.

Warnings that the American economy is already in the grip of a new recession, and fears that this will prove long and deep, were reinforced after official figures showed that it contracted at an annual rate of 0.3 per cent in the past quarter.

The drop in US national income and output – by 0.1 per cent on a quarter-on-quarter basis – marked an abrupt reversal after growth at a brisk 0.7 per cent quarterly rate in the previous three months.

US economists predicted that a far more brutal slump was now set to follow in the present quarter, and into next year. “The drop is a harbinger of much worse things to come. We now expect that GDP will contract at an average 3 per cent annualised rate in the fourth quarter and the first quarter of next year, generating the worst recession since 1981-82,” Abiel Reinhart, of JPMorgan Chase in New York, said.

The main drag on America’s performance in the past three months came as consumer spending slumped at an annual rate of 3.1 per cent. It was the first drop since the end of 1991, and the biggest since 1980’s second quarter.

Economic activity was also sapped as businesses cut back on their investment spending – the first fall since the end of 2006 – which fell at a 1 per cent annual rate, after rising by an annual 2.5 per cent in the second quarter. Investment in equipment and software fell by an annual 5.5 per cent.

The grim news came after the US Federal Reserve stepped up its drive to shore up the rapidly faltering US economy on Wednesday with a further half-point cut in official interest rates to 1 per cent.

American Express, the credit card group, added to the gloom, announcing a cull of 7,000 jobs or nearly 10 per cent of its workforce, as it seeks to cut costs by $1.8 billion (£1.1 billion) next year, while Motorola, the mobile phone company, is looking to shed 3,000 posts, or 5 per cent of its staff.

Markets found solace, however, in the third-quarter fall in US GDP being smaller than predicted, and in hopes that worldwide rate cuts led by the Fed could forestall a global recession. On Wall Street, US blue-chip shares closed up more than 2 per cent, while in London the FTSE 100 index closed up 49.1 points at 4,291.7, having risen 400 points in the previous two days.

Anxieties over the global outlook were stoked after the latest snapshot of economic sentiment in the euro-zone showed confidence among businesses and consumers at its lowest since 1993. Economists said that this was a clear signal that the 15-nation bloc was sliding into recession.

Germany and France joined Japan in signalling further moves to bolster economic conditions to try to stave off a recession. Berlin is set to introduce a stimulus package worth up to £15 billion next week. In France, President Sarkozy said a fund for domestic industries would be set up in three weeks.

In Japan, the Government unveiled a Y26.9 trillion (£169 billion) package to stimulate the economy, including fresh spending of Y5 trillion on measures to buoy growth. Taro Aso, the Japanese Prime Minister, said: “A harsh storm seen only once in 100 years is raging. Under such circumstances, I am certain that what is most important is to remove uncertainties from the lives of people.”

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