It's official: US now in recession for a year

It's official: US now in recession for a year

December 3, 2008

WASHINGTON: The US economy has been in a recession for a year, the National Bureau of Economic Research says.

The bureau, a private, non-profit research organisation, said its group of academic economists who determined business cycles had met and decided that the US recession began last December.

By one benchmark a recession occurs whenever the gross domestic product, the total output of goods and services, declines for two consecutive quarters.

US GDP turned negative in the July-September quarter of this year, and many economists believe it is falling in the current quarter at an even sharper rate.

But the bureau's dating committee uses broader and more precise measures, including employment data. In a news release it said its cycle dating committee held a telephone conference call and made the determination on when the recession began.

Many economists believe the current downturn will be the most severe since the recession of 1981-82. The country

is being battered by the most severe financial crisis since the 1930s as banks struggle to deal with billions of dollars

in loan losses.

Two other new reports provided a grim snapshot of how steep the economic slump is becoming. The US Commerce Department reported that construction spending fell by a larger-than-expected 1.2 per cent in October, and the Institute for Supply Management said its gauge of manufacturing activity dropped to a 26-year low last month. The decision b the National Bureau of Economic Research means that the US economic expansion lasted from November 2001 until December 2007. Economic expansions peak and recessions begin in the same month, according to the bureau's dating methods.

The bureau, founded in 1920, has more than 1000 university professors and researchers who act as associates, studying how the economy works.

The decision on the recession means that during the eight years that President George Bush has been in office the country has had two recessions. The first downturn lasted from March 2001 until November of that year.