US recession official

Dec 1, 2008 10:56 p.m.

The business Cycle Dating Committee of the National Bureau of Economic research (NBER) has reached a decision on when the current American recession began. It has stated last Friday that the US entered recession in December 2007. They define a recession as a significant decline in economic activity spread across the economy lasting more than a few months normally visible in production, employment, real income and other indicators"
According to the NBER the last expansion lasted 73 months and began in 2001. The expansion before that which began in the early 1990s lasted 120 months.

The US economy has contracted 0. 2% in the fourth quarter of 2007, grew 0.8 % in the first quarter of 2008, 2.8% in the second quarter and then contracted 0.5 % in the third quarter.   Previous recessions since the second world war have had a duration of 6 to 18 months. Analysts believe that unemployment will peak at about 9% in 2010 more than two years after the recession has begun even with a major stimulus package passed by the Congress.

There is already some evidence that the first stimulus package had some positive impact upon the economy but this will be clearer   in the months to come and particularly so when it is reinforced by the much larger package that the Obama administration will embrace.