WASHINGTON: The US economy has been in a recession since December 2007, the National Bureau of Economic Research said yesterday.
The NBER — a private, nonprofit research organization — said its group of academic economists who determine business cycles met and decided that the US recession began last December.
The White House commented on the news that a second downturn has officially begun on President George W. Bush’s watch without ever actually using the word “recession,” a term the president and his aides have repeatedly avoided. Instead, spokesman Tony Fratto remarked upon the fact that NBER “determines the start and end dates of business cycles.”
“What’s important is what is being done about it,” Fratto said. “The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that’s where we’ll continue to focus.”
Many economists believe the current downturn will last until the middle of 2009, and will be the most severe slump since the 1981-82 recession.
By one benchmark, a recession occurs whenever the gross domestic product, the total output of goods and services, declines for two consecutive quarters. However, the NBER’s dating committee uses broader and more precise measures. The GDP did contract by 0.2 percent at an annual rate in the fourth quarter of 2007. However, that drop was followed by a 0.9 percent rate of increase in the first quarter and a 2.8 percent spurt in the second quarter, when the economy was boosted by the distribution of millions of economic stimulus payments.
However, employment, one of the measurements tracked by the NBER, has been falling since January.
President Bush expressed regret yesterday that the global financial crisis has cost jobs and shrinking retirement accounts and said he will support more government intervention if needed to ease the recession.
US and European stocks plunged yesterday. Shares in London, Paris and Frankfurt all closed more than 5.0 percent lower, while Asian shares closed mixed earlier in the day.
US stocks dived deeper into the red yesterday. The Dow Jones Industrial Average plummeted 443.80 points (5.03 percent) to 8,385.24 at 1807 GMT after five winning sessions. The tech-heavy Nasdaq slid 94.57 points (6.16 percent) to 1,441.00 and the broad-market Standard & Poor’s 500 index dropped 53.86 points (6.01 percent) to 842.38.
In Tokyo, shares closed down 1.35 percent, Mumbai’s stock market lost 2.78 percent yesterday and Seoul and Sydney each fell 1.6 percent.
