It’s been creeping behind Americans for many months, like a slow moving hurricane blowing winds of bankruptcy and foreclosure. ‚ On a day when the Dow Jones lost almost eight per cent, the‚ National‚ Bureau of Economic Research (NBER) officially announced that the U.S. has been in a recession since December 2007, according to the New York Times. ‚
Many investors have long said the country was in a recession, despite last week’s monumental gains. ‚ The NBER had been‚ reluctant‚ to officially‚ announce‚ the recession in hopes of an economic turnaround.
However on Monday, the losses were staggering. ‚ Large financial firms led the downturn; Wall Street watched as Merrill Lynch, Citigroup and Morgan Stanley dropped almost 20 per cent.
The NBER did not have a length estimation for this‚ particular‚ recession, however did declare that a typical recession can last anywhere from six to 18 months, reports the Associated Press.
“Recession fears have now become a reality, and the questions that remain are just how bad and for how long this recession will linger over us,” said‚ Michael Fowlkes, analyst at Investor’s Observer, according to AP. ‚ “So far in 2008, employers have slashed 1.2 million jobs, and the bad news is expected to continue when we get employment data for November this Friday.”
Analysts‚ at the NBER‚ agree that even with a substantial stimulus package, unemployment in the U.S. will likely reach an astonishing nine per cent by 2010. ‚ That’s almost a five per cent increase from the 2007 estimated unemployment rate of 4.4 per cent.
Federal Reserve Chairman‚ Ben Bernake told press that the economy‚ “will probably remain weak for a time.” ‚ He also said that the Fed could possibly begin buying up Treasury securities in an effort to spur growth, a highly unusual move.
The last time the U.S. was in a recession was March through November 2001. ‚ If this recession lasts longer than five more months, it would be the longest since the Great Depression of the late 20’s and 30’s.
“It is clearly not going to end in a few months”‚ said NBER‚ committee‚ member Jeffrey Frankel, confirming that Americans could face even harder times ahead.