Spending fell sharply this quarter, the worst since the 1950s on non-durable goods. Spending on durable goods fell 14 percent, the worst since 1987.
The Commerice Department reported a three percent drop in consumer spending. Consumer spending is seen as the fuel of U.S. economic growth. Prices rose during the third quarter as purchases declined.
The third quarter growth is a 180 degree turn since this year's second quarter. The second quarter grew 2.8 percent.
The Federal Reserve indicated Wednesday it was concerned about inflation as it cut interest rates, but it was even more worried about weak economic growth. The Feds cut the rate by .5% to 1.0%.