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UPDATE 1-U.S. entered recession December 2007, panel says

Published 12/01/2008, 01:01 PM
Updated 12/01/2008, 01:04 PM

(Adds details from NBER statement, White House comment)

WASHINGTON, Dec 1 (Reuters) - The U.S. economy slipped into recession in December 2007, the National Bureau of Economic Research, the prestigious private research institute that is regarded as the arbiter of U.S. recessions, declared on Monday.

The NBER's business cycle dating committee said its members met by conference call on Friday and concluded that the 73-month economic expansion had ended. The previous period of economic expansion, which ended in 2001, lasted 10 years.

The current recession, which many economists expect to persist through the middle of next year, is already the third-longest since the Great Depression, behind only the 16-month slumps of the mid-1970s and early 1980s.

The NBER does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries. Instead, it looks for a decline in economic activity, spread across the economy and lasting more than a few months.

The current downturn was particularly tricky to define because gross domestic product remained positive until the third quarter this year. The NBER said its committee looked at payrolls, which peaked in December 2007 and declined in every month since then, as well as real GDP and other data series to determine when the recession started.

"The committee determined that the decline in economic activity in 2008 met the standard for a recession," the NBER said in a statement. "All evidence other than the ambiguous movements of the quarterly product-side measure of domestic production confirmed that conclusion."

The White House acknowledged the NBER's declaration, but said that did not change its course on coping with the financial crisis that has raged since August 2007.

"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," White House spokesman Tony Fratto said. (Reporting by Emily Kaiser and Tabassum Zakaria; Editing by Leslie Adler)

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