Washington  - The US economy contracted by 0.3 per cent in the third quarter of 2008, the sharpest decline in seven years amid a global financial crisis that has blocked credit access and severely depressed spending, the US government said Thursday.

The government's initial estimate puts the US on track for a recession in the second half of the year. A recession is rated as two straight contracting quarters. The number was slightly better than expected: Economists had predicted a 0.5-per-cent drop, according to Bloomberg News. (dpa)