|
Atlanta: Harvard University economist Martin Feldstein, a member of the group that dates business cycles in the US, said the nation has entered a recession that could be the worst since World War II.
"I believe the US economy is now in recession,'' Feldstein, president of the National Bureau of Economic Research (NBER), told the Futures Industry Association conference in Boca Raton, Florida.
"Could this become the worst recession we have seen in the postwar period? I think the answer is yes. I would emphasise the word 'could'."
Feldstein's remarks represent the first time that a member of the NBER's business-cycle dating committee has publicly described the current downturn as a recession. The economy may not respond quickly to Federal Reserve interest-rate cuts, and a package of tax rebates and investment incentives will offer only a temporary boost, he said.
Investors on Friday raised their bets that the Fed will slash interest rates by a full percentage point this week after the central bank and JPMorgan Chase agreed to provide emergency funding to Bear Stearns, the fifth-largest US securities firm.
Bush administration officials including Treasury Secretary Henry Paulson have avoided saying the economy is in a recession.
"We have slowed down very significantly,'' Paulson said on Friday. "I'm not getting into'' whether it is a recession. The economy expanded 0.6 per cent at an annualised pace last quarter, and economists predict the pace will slow to 0.1 per cent in January to March.
The US unexpectedly lost jobs in February for the second consecutive month, a government report showed on March 7. A private report Friday showed consumer sentiment this month sank to a 16-year low.
"By almost every measure the US economy is moving sideways or slightly down for the last few months,'' said Feldstein, who in January put the odds of a recession at more than 50 per cent.
|
