Jusavitsi

The slowdown in the third quarter was worse than economists were expecting. The consensus forecast compiled by Bloomberg News was for 2 percent growth.

The stock market opened lower on the news, with major indices falling by about 0.5 percent in the first minutes of trading.

A major question hanging over both the economy and the political campaign this fall has been just how severely the slump in housing would drag down growth. The Commerce Department’s report, which will be revised twice in coming months as more complete data becomes available, shows that the drag was indeed substantial.

Residential construction plunged by nearly one-fifth in the quarter, the steepest decline in 15 years. That trend alone knocked 1.1 percentage points off the overall figure for economic growth. As recently as the spring of 2005, that sector was a major motor of growth, adding more than one percentage point