The U.S. economy shrank in the third quarter at a 0.5 percent annual pace as the now year-old recession began to intensify.

The contraction in gross domestic product (GDP) from July through September, which matched the median forecast in a Bloomberg News survey, was the worst since 2001, according to revised figures released today by the U.S. Commerce Department. Consumer spending fell the most in almost three decades.

A lack of credit, declining home prices and cutbacks in consumer and business spending are projected to lead to an even deeper slump in the final three months of the year. President-elect Barack Obama and his economic team are working on a proposal for a stimulus package that could amount to about $850 billion to limit the damage and salvage or create 3 million jobs.

Today’s GDP report is the last of three estimates. The median forecast was based on a survey of 65 economists by Bloomberg News. The estimated declines ranged from 0.4 percent to 0.8 percent. The economy grew at a 2.8 percent pace from April through June.

Profits, including estimates for the value of inventories and adjustments for capital investments, fell 1.2 percent compared with the previous three months, the seventh decline in the last eight quarters. Compared with the third quarter of 2007, profits were down 9.2 percent, the biggest drop since 2001.

The inflation measure tracked by Federal Reserve policy-makers, which is tied to consumer spending and excludes food and fuel prices, rose at a 2.4 percent annual pace, down from the 2.6 percent increase previously estimated.

Consumer spending, which accounts for more than two-thirds of the economy, declined at a revised 3.8 percent annual rate, exceeding the 3.7 percent decrease estimated by the government last month. It was the first decline since 1991 and the biggest since 1980.