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Kai Ryssdal:
A distinct lack of cash brought the U.S. economy to a screeching halt last quarter. Gross domestic product fell 0.3 percent July through September. Economists had predicted an even bigger decline. But Marketplace’s Sarah Gardner reports the worst may be yet to come.

Sarah Gardner:
A rule of thumb in economics: Two consecutive quarters of negative growth equals a recession. Today’s announcement marks the first quarter. But Mesirow Financial’s Diane Swonk isn’t waiting for the second.

Diane Swonk: There’s really no question we’re in recession.

Today’s data shows Americans reeled in their spending this summer by 3.1 percent, an annual rate that hasn’t been matched since 1980. That’s right before the U.S. plunged into one of its deepest recessions ever. Swonk predicts GDP will shrivel tenfold next quarter.

Swonk: The ground is moving underneath us and what has been surprising is how quickly people have been also put out of their jobs.

The pink slips have been flying the past few weeks. Everyone from American Express and Yahoo to Whirlpool and Time Magazine. Not to mention the tens of thousands of jobs expected to disappear on Wall Street. Jay Bryson, a senior economist at Wachovia Corporation, says the labor market is quickly cratering.

Jay Bryson: Our guess is that by early part of next year you’ll see the unemployment rate at 7 percent and it’s probably going to top out probably close to 8 percent which would be the highest since the 1980’s.

This recession may not be quite as severe as that early 80’s meltdown. But Diane Swonk says it won’t be like the recession in 2001 either, where consumers rode out that economic storm by borrowing. Swonk says that credit buffer isn’t there this time around and that means one bumpy ride.

I’m Sarah Gardner for Marketplace.