Page last updated at 18:32 GMT, Monday, 1 December 2008

US recession 'began last year'

Machinary
US manufacturing has now contracted for four months in a row

The US entered a recession in December 2007, according to the National Bureau of Economic Research (NBER).

Its business cycle dating committee, which is considered the arbiter of whether the US is in recession, met on Friday to make the decision.

The NBER says that the US economic expansion lasted 73 months, from November 2001, before contracting.

It used a broad range of economic indicators, such as employment and production, to make this judgement.

In a statement, the committee said that the "decline in economic activity in 2008 met the standard for a recession".

It said that employment peaked in December 2007 and has been falling every since.

And it said that personal income began falling in the first quarter of 2008, while industrial production peaked in January 2008.

The NBER uses key monthly indicators of economic output, including employment, industrial production, real personal income, and wholesale and retail sales - to determine when economic growth has turned negative, rather than relying solely on two quarterly declines in GDP.

It defines 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."

The seven members of the committee who made the decision include economists Robert Hall (Stanford), Martin Feldstein (Harvard), Jeffrey Frankel (Harvard) and James Poterba (MIT).

Another member of the committee, Christiana Romer (Berkeley) who was appointed last week to head president-elect Obama's council of economic advisors, did not participate in the decision.

Although a private sector body, the NBER has been dating the business cycle since 1929.

It does not forecast the length of the recession.

However, other figures published on Monday suggested that the slowdown is gathering pace.

US manufacturing output is falling at the fastest rate since 1982.

And revised figures for US GDP show that it fell by 0.5% in the third quarter of 2008.

The US central bank, the Federal Reserve, has already cut interest rates to 1%, but may cut further at its next meeting on 16 December.



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