WASHINGTON - The U.S. economy has been in a recession since December 2007, the National Bureau of Economic Research said Monday.
The NBER - a private, nonprofit research organization - said its group of academic economists who determine business cycles met and decided that the U.S. 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 well into 2009, and will be the most severe slump since the 1981-82 recession. 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.
The Bush administration won approval from Congress on Oct. 3 for a $700 billion rescue package for the financial system. Bush said in an interview with ABC's "World News" to be aired Monday that he would support additional intervention if necessary to end the recession.
"I'm sorry it's happening, of course," Bush said, referring to a global financial crisis that has eliminated millions of jobs and damaged retirement accounts.
Both Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson were scheduled to give speeches Monday providing an update on how the government's rescue efforts are working to deal with the economic distress.
Two new reports on the economy provided a grim snapshot of how steep the slump is becoming. The Commerce Department reported Monday that construction spending fell by a larger-than-expected 1.2 percent in October, while the Institute for Supply Management said its gauge of manufacturing activity dropped to a 26-year low in November.
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.
The GDP turned negative again in the July-September quarter of this year, falling at an annual rate of 0.5 percent. Many economists believe the GDP is falling in the current quarter at an even sharper rate of 4 percent.
In a news release, the NBER said its cycle dating committee held a telephone conference call on Friday and made the determination on when the recession began. Founded in 1920, the NBER has more than 1,000 university professors and researchers who act as bureau associates, studying how the economy works
The NBER decision means that the economic expansion lasted from November 2001 until December 2007. Economic expansions peak and recessions begin in the same month, according to the NBER's dating methods.
The decision on the recession means that during the eight years that Bush has been in office, the country has seen two recessions. The first downturn lasted from March 2001 until November of that year.