WORLD> America
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WORLD> America
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US is in a 14-month recession, forecasters say
(Agencies)
Updated: 2008-11-18 11:17 NEW YORK -- The US economy fell into a recession last spring and will contract sharply this quarter as more than 200,000 workers per month are added to the rolls of the unemployed, a survey said on Monday.
The Philadelphia Federal Reserve's latest Survey of Professional Forecasters removed some of the glow from an earlier report showing industrial output rebounded in October after hurricane disruptions produced a stunning fall in September. Early data from the factory sector also supported the grim view of the forecasters, showing manufacturing in New York state tumbled in November to yet another record low. Japan on Monday joined the euro zone in recession. Although the US economy contracted in third quarter, that followed two consecutive quarters of growth, albeit helped by government stimulus payments. The arbiter of US business cycles has not yet declared the economy in recession. The latest data and surveys provided new evidence that turmoil in credit markets was tightening its grip over the economy, which is unlikely to see any relief soon from the worst financial crisis since the Great Depression. "The early signs suggest that the November data cycle is likely to be extremely weak," analysts at RDQ economics said in a research note. On Wall Street, stocks were weaker in volatile trade, though off early lows, while government bonds were mixed and the dollar was a shade higher against the yen. The Philadelphia Fed's survey predicted gross domestic product would shrink by 2.9 percent in the fourth quarter, a sharp downgrade from the previous prediction of 0.7 percent growth. It said the US economy entered a recession in April and that it will last 14 months, which would make it one of the longest recessions since the Great Depression of the 1930s. Only the 16-month recessions in the mid-1970s and early 1980s were longer. Even though the economy was technically growing in April this year it would not be unprecedented for the National Bureau of Economic Research to declare a recession was occurring then. The NBER measures recessions by "a significant decline in economic activity spread across the economy," rather than the traditional definition of two consecutive quarters of falling GDP. The recession of March-November 2001 did not include two consecutive quarters of GDP contraction. This year, the economy has lost 1.2 million jobs since an uninterrupted labor market slump started in January, while manufacturing has contracted for most of the year. The survey predicted the economy would shed an average of 222,400 jobs per month this quarter. It said first-quarter GDP would decline by 1.1 pct and the unemployment rate would hit 7.0 percent during the first three months of next year. A separate report by the Federal Reserve showed US industrial production rose a stronger-than-expected 1.3 percent in October after a downwardly revised September drop of 3.7 percent, the biggest fall in more than 62 years. The September slide in industrial output was the steepest since a 5.0 percent decline in February 1946. |
