Economy Declined 0.5% in Third Quarter

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WASHINGTON – The economy was shrinking in the summer and corporate profits were falling even before the financial crisis struck with full force. Analysts are forecasting that those small declines will be followed by much larger decreases this quarter as the longest recession in a quarter century gains intensity.

The Commerce Department reported Tuesday that the gross domestic product, the broadest measure of economic health, declined at an annual rate of 0.5 percent in the July-September quarter, while corporate profits fell 1.2 percent.

The fall in GDP was unchanged from an estimate made a month ago. The decline in corporate profits was slightly larger than the 0.9 percent fall estimated a month ago.