Sliding retail sales figures have raised fears that a US recession could come on more quickly and strongly than even some gloomy predictions.
The latest readings on the health of the real economy came as Ben Bernanke, chairman of the Federal Reserve, warned that activity would not rebound right away, even after the government's dramatic actions to stabilise the banking system.
Earlier, Janet Yellen became the first member of the Fed's interest rate-setting committee to declare that the US is now in recession, and although Mr Bernanke stopped short of using that word, he warned that "economic activity had been decelerating even before the recent intensification of the crisis".
Retail sales data for September showed that US consumer spending was falling at an annualised rate of 1.2 per cent.
This is the worst monthly reading for three years, and it means that sales have now been falling for three straight months, the longest period of decline since comparable records began in 1992.
"This is hideous and the only mitigating factor we can think of is Hurricane Ike, which surely depressed sales in Houston and other affected areas," said Ian Shepherdson, of High Frequency Economics.
"The details show sales falling everywhere except gas stations and health stores, with the biggest declines in clothing, furniture, electronics and autos. There can be no doubt now that the economy is in recession."
The data was worse than forecast by analysts, who had pencilled in an annualised decline of 0.7 per cent, based on the downbeat trading statements put out by retailers in the first days of this month.
ShopperTrak RCT, a consultancy that measures shopper numbers as a way of predicting retail sales, said October was shaping up to be even worse.
In the week ended 11 October, numbers were down 2.7 per cent from the same period last year.
"The US economy appears to be in a recession," Ms Yellen said in a speech to Silicon Valley executives.
"The turmoil in global financial markets poses a serious and direct threat to the well-being of all citizens of the global economy."
Speaking to the Economic Club of New York, Mr Bernanke said he was confident that the Fed and the US Treasury had the tools needed to solve the crisis in financial markets, but he said we were just seeing the beginning of the effects on the real economy.
"Stabilisation of the financial markets is a critical first step, but even if they stabilise as we hope they will, broader economic recovery will not happen right away," he said.
"Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning."
With nervous Americans now discussing whether the country may now be headed towards a second Great Depression, Mr Bernanke n a noted scholar of the era n said that policymakers this time had repeated neither of the two main mistakes that led to economic calamity.
The Fed had cut rates aggressively, he said, and "we didn't wait for three-and-a-half years to take action to stabilise the financial systemi.
New data vindicated the Fed's predictions that inflation would subside as the economy weakened.
The Labor Department said the producer price index, a gauge of prices received by farms, factories and refineries, dropped 0.4 per cent in September.
Separately, the New York Fed's "Empire State" index of general business conditions tumbled in October to the lowest since its inception in 2001, hitting - 24.62.
This was below September's - 7.41.