Europe officially fell into recession on Friday and the United States economy suffered further blows as world leaders headed to Washington to address the worst financial crisis in 80 years.
Leaders of the world's 20 richest nations are not expected to make any breakthroughs at the G20 meeting in the American capital, given the absence of US President-elect Barack Obama, whose involvement will be key to any global initiatives.
The financial crisis continues to wreak havoc on the world's major economies, with official data showing the 15-nation euro zone economy had shrunk by 0.2% for the second quarter in a row, meaning it technically is in recession.
The news was widely anticipated and follows data showing that Germany and Italy, two of the biggest eurozone economies, are already in recession.
It is the first recession the region has seen since the eurozone's creation in 1999, and analysts forecast worse to come for the countries that use the euro.
The sharp decline in exports has winded Germany - one of the world's largest economies - with data out on Thursday showing it is in recession. The economy had shrunk 0.5% in the third quarter, following a 0.4% drop in the second quarter.
The Italian and Spanish economies followed suit, also contracting in the third quarter. For Spain, it was the first such drop since 1993 and analysts predict it will soon fall into recession.
The wider European Union, made up of 27 countries, is also in danger of slipping into a recession with the region's output shrinking by 0.2% in the third quarter, after flat growth in the previous three months.
A bleak Bank of England forecast earlier this week suggests that Britain is already in recession.
Much to the surprise of most analysts, France's economy bucked the trend and expanded in the third quarter, supported by consumer spending and company investment. Official data showed that the French economy grew by 0.1% in the June to September period.
US recession fears worsen
Signs for the American economy worsened on Friday, with government data showing retail sales fell a record 2.8% in October - the biggest decline since comparable numbers were first collected in 1992. It was the fourth month in a row sales were down.
The US is probably already in recession, most economists agree, but official data showing that will not come out until January.
Citigroup Inc, one of the hardest-hit financial companies, will soon announce job cuts of up to 10% of its staff, according to a Reuters, which could affect more than 30,000 employees.
Sun Microsystems said it would slash up to 6,000 jobs, or 18% of its workforce, as it looks to save money while demand wanes for its high-end business computers.
Freddie Mac, the second-largest provider of US home loan financing, reported a $US25 billion quarterly loss as the housing slump worsened, forcing it to draw on a $US100 billion Treasury Department lifeline.
Meanwhile, chances of a bailout for the big US carmakers seemed to recede, increasing the possibility of a wave of mass layoffs at General Motors Corp, Ford Motor Co and Chrysler LLC.
The US Senate plans on Monday to take up a bill that would provide emergency aid to automakers, but it remained unclear if there was enough support for it to pass.
The only glimmer of optimism was that US consumer optimism rose slightly, helped by lower gasoline prices.