The economy contracted at a 0.3 percent annual pace in the third quarter, the biggest decline since the recession in 2001, Bloomberg reported.

The decline was less than analysts’ median forecast of a 0.5 percent drop, but in sharp contrast to the 2.8 percent growth recorded in the second quarter.

Consumer spending, which makes up the biggest portion of economic activity, fell at a 3.1 percent annual pace, the first decline since 1991, and the biggest drop since 1980, the Commerce Department report showed. Spending on non-durable goods, such as clothing and food, declined 6.4 percent, the most since 1950.

With unemployment rising, investments shrinking and home prices falling, consumers could cut back even more in upcoming months.

Less investment in business equipment and residential construction projects also affected economic growth. A shrinking trade deficit and a smaller decline in inventories prevented a steeper decline.

The price gauge rose at a 4.2 percent pace in the third quarter, the biggest gain in 17 years, but analysts expect the economic slowdown could force companies to limit price increases in the future.

This is the first report for the quarter; it will be revised in November and December as more information becomes available.