US In 'Serious Recession'

Source : The Straits Times, Nov 11, 2008

Survey of economists sees US facing long, deep recession.

WASHINGTON - THE US economy is entering 'the steep part' of what could be the worst recession since World War II, said a member of the panel that gauges American recessions and expansions.

'There's a chance it'll be the worst post-war recession,' Mr Jeffrey Frankel said. -- PHOTO: THOMSON REUTERS

Mr Jeffrey Frankel, part of the business cycle dating committee at the Cambridge, Massachusetts-based National Bureau of Economic Research (NBER), said in a Bloomberg Television interview on Monday: 'We're in for a pretty serious recession.'

'There's a chance it'll be the worst post-war recession,' he said.

In October, the US lost 240,000 jobs in the 10th straight monthly decline. The unemployment rate jumped to 6.5 per cent, the highest since 1994, the Labour Department said last week. Bloomberg reported that national and regional manufacturing and industrial production shrank to recessionary levels in October.

Fellow NBER committee members Martin Feldstein, a Harvard University professor, and head of the eight-member panel Stanford University economist Robert Hall, have said the US is in a recession.

Professor Hall said in an interview last week that the committee needs more data on gross domestic product before making a recession call.

The US economy shrank at a 0.3 per cent annual rate last quarter, the most since the 2001 downturn, advance Commerce Department figures showed on Oct 30. The department will publish a revised estimate on Nov 25, with a third revision coming in December. The fourth-quarter GDP release is scheduled for late January.

'We're just going into the steep part of it now,' Mr Frankel said. 'We're a little puzzled whether to say that it started last December, because that's when employment peaked, or whether it started in, let's say, October, because that's when the economy really went into a nosedive.'

The NBER panel defines a recession as a 'significant' decrease in activity over a sustained period of time. The decline would be visible in GDP, payrolls, production, sales and incomes, according to the group.