NEW YORK ? It’s now official. The United States has finally slid into recession, according to the majority of economists in the latest Wall Street Journal economic-forecasting survey, a view that was reinforced by new data showing a sharp drop in retail sales last month.
“The evidence is now beyond a reasonable doubt,” said Scott Anderson of Wells Fargo & Co., who was among the 71 percent of 51 respondents to say that the economy is now in a recession.
The Commerce Department said Thursday that retail sales tumbled 0.6 percent in February; sales excluding volatile auto and parts decreased 0.2 percent. The decline reflected a sharp slowdown in consumer spending, the primary driver of U.S. economic growth, as Americans grapple with high gasoline prices and the credit crunch, as well as drops in home values and other asset prices.
The survey, conducted March 7 through March 11, marked a precipitous shift to the negative from the previous survey conducted five weeks earlier. For example, the economists now expect nonfarm payrolls to grow by an average of only 9,000 jobs a month for the next 12 months — down from an expected 48,500 in the previous survey. Twenty economists now expect payrolls to shrink outright. And the average forecast for the unemployment rate was raised to 5.5 percent by December from 4.8% in the previous survey.
Much of the gloom stemmed from last Friday’s employment report, which showed a loss of 63,000 jobs in February, the second consecutive monthly decline. “My recession call comes from the employment data,” said Stephen Stanley of RBS Greenwich Capital. “It struck me as a recessionary number.”
Twenty-nine of 55 respondents said they expect the economy to contract in the current quarter and 25 expect it to do so in the second. The average of all the forecasts is for meager growth — just 0.1 percent at an annual rate in the current quarter and 0.4 percent in the second.
The Wall Street Journal surveys a group of 55 economists throughout the year. Broad surveys on more than 10 major economic indicators are conducted every month. Once a year, economists are ranked on how well their forecasts have fared.
Although the classic definition of recession is two consecutive quarters of declines in the gross domestic product, Stanley pointed out that the National Bureau of Economic Research, the nonpartisan organization that is the official arbiter of when recessions begin and end, doesn’t necessarily follow that definition.
“If you go back to the 2001 recession, there was only one negative GDP quarter, and there might not even be one negative quarter in this recession,” he said.
The economists also expressed growing concerns that a 2008 recession could be worse than both the 2001 and downturns. They put the odds of a deeper downturn at an average 48 percent, up from 39 percent in the previous survey. Mark Nielson of MacroEcon Global Advisors said that “we recognize the previous two recessions were mild and, if a recession does occur, it is likely to be slightly worse than the previous two.”
Amid the concerns about the economy, respondents expect more action from the government and the Federal Reserve. Some 63 percent said the use of public money to deal with the housing crisis is now likely or certain, while on average they expect the Fed to lower its benchmark federal-funds rate to 2 percent by June from the current 3 percent.
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