This is the VOA Special English Economics Report.

      Early estimates show that the United States economy shrank by three-tenths of one percent from July through September. Economists had predicted a five-tenths drop. But Thursday's report from the Commerce Department also showed that Americans cut their spending by the most in almost thirty years.

    The economy has shrunk only one other time since the recession of two thousand one. That was at the end of last year.

A recession is traditionally defined as at least six months of decrease in the gross domestic product. G.D.P. is the value of all goods and services produced within a country.

Recently, many central banks, fearing a worldwide recession, have cut interest rates. On Wednesday, the Federal Reserve cut its target rate for overnight loans between banks from one and a half percent to just one percent. The federal funds rate has not been that low since June of two thousand four.

Alan Greenspan and Henry Waxman, chairman of the House Committee on Oversight and Government Reform

The Fed chairman then was Alan Greenspan. Critics say his support of low-cost credit, plus his resistance to stronger controls, helped inflate housing prices. He thought lenders understood risk better than government regulators. But high-risk loans led to today's credit crisis once the housing bubble burst.

Last week, the House Committee on Oversight and Government Reform called Alan Greenspan to hearings on the financial crisis. Chairman Henry Waxman asked him about his positions in the past on supervision of financial markets.

HENRY WAXMAN: "My question for you is simple. Where you wrong?"

ALAN GREENSPAN: "Partially. But let's separate this problem into its component parts."

    Alan Greenspan went on to defend some of the complex financial products called derivatives. But he said there are "some serious problems" with credit default swaps. Buyers use this kind of derivative as insurance against losses on debts they are owed.

  Credit default swaps on debt related to risky home loans almost collapsed A.I.G. The huge insurance company was rescued with government loans.

    Henry Waxman pushed Alan Greenspan for a more complete answer -- unlike the days when he was treated like a financial god.

HENRY WAXMAN: "Well, where do you think you made a mistake?"

ALAN GREENSPAN: "I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders."

    Consumer confidence, a measure of how Americans feel about the world's largest economy, is at its lowest in at least forty years.

    And that's the VOA Special English Economics Report, written by Mario Ritter. I'm Steve Ember.