With shoppers buying less, businesses have been reluctant to order new stock.
Consumer spending, which accounts for more than two-thirds of the US economy, increased at a rate of 1.9%, down from 2.4% in the previous quarter.Business investment fell by 5.9% - the biggest quarterly decline since the depths of the financial crisis in 2009.
Oil and gas exploration fell by a record 86% as energy companies cut back on spending following the dramatic slide in oil prices.