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.
By one benchmark, a recession occurs whenever the gross domestic product, the total output of goods and services, declines for two consecutive quarters. The 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 NBER's dating committee uses broader and more precise measures, including employment data. In a news release, the group said its cycle dating committee held a telephone conference call on Friday and made the determination on when the recession began.
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 be the most severe 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.
Federal Reserve Chairman Ben Bernanke said Monday that further interest rate cuts were possible but he cautioned that there were limits to how much such action will be able to revive an economy expected to remain weak well into next year.
"Although further reductions ... are certainly feasible, at this point the scope for using conventional interest rate policies to support the economy is obviously limited," Bernanke said in a speech to business executives in Austin, Texas. The Fed is widely expected to cut a key interest rate when officials next meet on Dec. 15-16.
Treasury Secretary Henry Paulson also was scheduled to give a speech Monday providing an update on how the government's rescue efforts are working to deal with the economic distress.
Two new reports provided a grim snapshot of how steep the economic 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.
The GDP contracted by 0.2 percent at an annual rate in the fourth quarter of 2007, but that that drop was followed growth in the first two quarters of this year, partially 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 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. 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 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.
COLUMBUS, Ohio Oil prices tumbled below $50 a barrel Monday as National Bureau of Economic Research reported that the U.S. economy has been in a recession since December 2007.
Crude had already fallen 8 percent on reports showing that manufacturing activity in the U.S. hit a 26-year low, which was much worse than expected, and construction spending fell again.
A panel of the NBER believes the current downturn will last until the middle of 2009 and will be the most severe slump since the 1981-82 recession.
Light, sweet crude for January delivery more than 9 percent, or $5.15 to settle at $49.28 a barrel on the New York Mercantile Exchange.
Manufacturing and consumer spending has eroded quickly and lowered demand for energy. That has erased nearly 66 percent of crude s market value since July when it peaked near $150 per barrel.
Analyst Phil Flynn with Alaron Trading Corp. said the $50 price remains significant psychologically for traders.
It opens up the possibility of further declines, he said.
In a note to investors Monday, Raymond James Equity Research slashed its 2009 oil price forecast from $90 per barrel to $60 per barrel.
In London, January Brent crude fell more than 10 percent, $5.58 to $47.91 on the ICE Futures exchange.
Oil prices are falling in the wake of an OPEC meeting in Cairo, Egypt, over the weekend, where member states announced no new production cuts.
On Saturday, Saudi Oil Minister Ali Naimi said that Organization of Petroleum Exporting Countries will do what needs to be done to shore up oil prices when the group meets Dec. 17 in Algeria.
Indications that OPEC has lost much of its power to control prices by cutting supply abound, however, with demand falling away fast.
A report on Iranian state TV Monday in which OPEC Secretary-General Abdullah El-Badri was quoted as saying that a daily oil production cut of between 1 million and 1.5 million barrels was likely in December did little to halt declines.
OPEC, which accounts for about 40 percent of global supply, cut output by 1.5 million barrels a day in October, bringing total cuts to around 2 million barrels a day this year.
Those measures have had no discernible effect on oil prices, which have fallen another 26 percent since the last round of production cuts on Oct. 24.
The OPEC meeting from their viewpoint was a disaster, Flynn said.
Oil traders also watched as the Dow Jones industrial average gave up 300 points Monday and as dueling economic reports buttressed evidence of a severe economic slowdown.
The Institute for Supply Management said its gauge of manufacturing activity fell to a reading of 36.2 in November.
That was a steeper-than-expected drop from the October reading of 38.9 and underscored that the hard economic times were beginning to have a major effect manufacturing. A reading below 50 indicates the sector is contracting.
The Commerce Department reported that construction spending dropped by 1.2 percent in October, much bigger than the 0.9 percent decline many analysts expected.
Survey of manufacturing activity in the euro zone and Britain also points to sharper-than-expected contraction in output. In China, an equivalent survey of its manufacturing sector also made for grim reading, generating fears that one of the main engines of global growth over the last few years is slowing sharply.
Sucden Research in London cited data from the United Nations, which now expects the global economy to grow by just 1 percent in 2009, compared with an earlier forecast expecting growth of 2.5 percent.
Meanwhile, prices at the pump continued to fall, but at a slower rate. The price fell half a cent overnight to $1.82 per gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That is 64.3 cents lower than a month ago and $1.248 lower than a year ago.
Prices also have been falling in Europe though they remain much higher than in the U.S.
In Germany, Europe s largest economy, a liter of gasoline sold for $1.47 per euro, or about $5.59 per gallon, according to TCS, the Swiss automobile club. That is down 26 percent from July 16.
Prices have fallen 24 percent since July 16 in France where gas sold for $1.40 per euro Monday.
In other Nymex trading, gasoline futures tumbled 9.8 cents to settle at $1.1112 a gallon.
Heating oil dropped 11.2 cents to settle at $1.6151 a gallon. Natural gas for January delivery, however, rose 10.5 cents to $6.615 per 1,000 cubic feet.