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The United States has sunk economy officially in a recession in December, which means it’s already fall more than the average for all recessions from World War II, according to economists committee responsible for meeting the nation’s business cycles .
Economy stating that it was in a drop of almost 12 months, the National Bureau of Economic Research confirmed what many Americans have been feeling in their bones.
But private forecasters warned that this reduction was likely to set a new record for length and postbelice likely to be more painful than any recession in 1980 and 1981.
“We will rewrite the record book on the length of this recession,” said Allen Sinai, president of Decision Economics in Lexington, Mass.. “It is still questionable whether it will set a new record depth. I hope not, but we do not know.”
As if you add a punctuation sinistră to what could become the worst season of holiday shopping in decades, the Dow Jones industrial average plunged nearly 680 points, or 7.7 percent, to 8149.09.
Part of the profit drop may have reflected the taking after last week’s surge in stock prices, but it also came in response to new data showing that manufacturing activity fell to its lowest point in 26.

Both the chairman of the Federal Reserve, Ben S. Bernanke and Treasury secretary, Henry M. Paulson Jr., vowed to use all tools at their disposal to restore a measure of normalcy to the economy.

Mr. Bernanke, speaking to business leaders in Austin, Tex., Said he was “certainly feasible” to reduce the overnight Fed reference interest rate below its current target of 1 percent of signaling that the central bank would lower rates at its next policy meeting in two weeks.

And in an unusually explicit monitoring, Mr. Bernanke said the central bank was also ready to use “second arrow in our quiver, if policy makers that have already reduced rate, called the funds rate Federal, to nearly zero.

Among the options, he said, the Fed may start aggressively buying up the longer-term Treasury securities. That would have the effect of driving down longer-term interest rates. The Fed is already doing something that way, by buying up commercial debt from private companies and mortgage securities guaranteed by Fannie Mae and Freddie Mac.

Investors have reacted to Mr. Bernanke’s remarks by pouring money into longer-term Treasury bonds, which pushed the already short, yields on low-10-years-and 30-year Treasuries to record Lows. Investors appeared to be mainly reacting to the clear signal from Mr. Bernanke that the Fed was preparing to pump money into the economy by buying up longer-term bonds.

The yield on 30-year Treasuries has declined 0.23 percentage points to 3.21 percent, in short, and reached a record low of 3.18 percent. The yield on the 10-years Treasuries fell 0.19 percentage points to 2.73 percent.

In normal times, these types of lower yields would mean the interest rates on mortgages, auto loans and other forms of consumer debt. But the credit markets were stopped by continued fears among financial institutions that can be trusted, even for short-term transactions, such effects on home loans and for other purposes, could remain modest.

Mr. Paulson, in a speech in Washington on Monday, vowed to look at new ways to use the $ 700 billion bailout fund that Congress approved in October.

In Congress, Democratic leaders are developing a big new fiscal stimulus plan that could total more than $ 500 billion. Democrats have said they planned to measure ready as soon as Congress convened with a strengthened Democratic majority in January. At the same time, Democrats could take up legislation next week to provide financial assistance for the automotive industry.

President Bush, increasingly strange man in the last weeks of his mandate, said his administration would do what was necessary to protect the system.

“I’m sorry it happens, of course,” Mr. Bush said in an interview with ABC’s “World News” on Monday. “Obviously, I do not like the idea of Americans lose their jobs or to be concerned about their 401 (k) s. On the other hand, the American people must know that we will protect the system.”

But many analysts have said that they have not yet seen signs that the economy was nearing a bottom. American consumers, who have for decades been the country’s sustained source of growth, when all else failed, they cut back on their spending sharply in May than at any time, from early 1980.

Consumer spending plunged in the third quarter of this year, and the evidence suggests, until now they may pull back even more in the fourth quarter. Consumers account for about 71 percent of U.S. economic activity, and their most recent withdrawal of gasoline is occurring even though prices have fallen by nearly half in recent months and left people with more money in their pockets.

In the official, stating that the current recession began in December 2007, National Bureau of Economic Research paid little to take into account the fact that the nation is actually gross domestic product expanded the least in the first and second quarters of 2008.

In explaining its decision, the Bureau noted that a wide variety of other indicators, including payroll employment and personal income, shot in December 2007. Payroll employment has fallen every month since then. Personal income declined and then zigzagged until June, and has fallen steadily since then.

Often gross domestic product vary widely from quarter to quarter, but it also received a boost somewhat artificial tax rebate checks that the government sent in last spring and early summer as a temporary stimulus.

Ed McKelvey, an economist at Goldman Sachs, said the starting point of the Bureau of December recession was close to Goldman’s own estimates.

In the ad downturn means that it is already an hour years. That is more than the average duration of 10.5 months for recessions from World War II. The current record for the longest recession, the last half century is 16 months, which was hit by downturns in both 1973-74 and 1980-81.

Mr. Sinai, the economy said a decision was hard to imagine that this reduction would be struck down in the next four months, which would make it all but certain to set a new record.

Mr. Paulson, who teamed up with last week a federal agent to start a new program of $ 200 billion to buy a debt of consumer and small business loans, said he has committed all but about $ 20 billion $ 350 billion Congress authorized for the first bailout fund.

“We are actively involved in developing programs to further strengthen our financial system so that the flow of credit to our economy,” said Mr. Paulson, in his speech. “We are continuing to review potential hindrance mitigation ideas that could be a use of funds.

Democratic lawmakers have criticized Mr. Paulson for refusing to use any of the money still to reduce Foreclosures. Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation, warned that in recent months by many as 4.5 million people were likely to lose their homes through foreclosure. Ms. Bair has proposed a plan that she said could prevent approximately one third of the Foreclosures.