Less than a week before Americans go to the polls to select a president, the government reported on Thursday that the economy contracted from July through September. In a stark indication of widening national distress, consumer spending dipped for the first time in 17 years.

Economists said the drop in economic activity  with the gross domestic product shrinking at a 0.3 percent annual rate  presages more bad news in the months ahead. The impacts of a now-global financial crisis are continuing to squeeze companies and impede investment, causing more layoffs and austerity, while prompting Congress to consider a fresh round of spending aimed at stimulating commerce.

“The economy has taken a turn for the worse, big time,” said Allen Sinai, chief global economist for Decision Economics, a consulting and forecasting group. “Consumption literally caved in. It is a prelude to much worse news on the economy over the next couple of quarters. The fundamentals around the consumer are all negative, and there are no signs of any help anytime soon, from anywhere.”

With the economy the dominant issue in the presidential election, the latest batch of dismal data offered no comfort to the Republican nominee, Senator John McCain of Arizona, who has been running behind the Democratic nominee, Senator Barack Obama of Illinois, in polls.