Washington: The mega bailout packages by the Federal government seem to have failed to steer the US out of a severe economic downturn, as the country enters into recession for the 17th straight month in April, one of the longest periods since the Great Depression of 1930s.
America officially entered into recession in December 2007, according to National Bureau of Economic Research (NBER) of the US.
The 17 months of recession also coincides with the G-20 meet on 2 April in London, where the world leaders would be coming together to discuss ways to tackle the meltdown.
To shore up the economy, the Federal government has already pumped in billions of dollars into the system and even unveiled a mammoth $787 billion stimulus plan.
Recently, the Obama administration came up with a public- private partnership proposal to buy toxic assets worth about $1 trillion. In addition to stimulus packages, the US government initiated unprecedented steps like buying stakes in financial institutions and guaranteeing toxic assets of certain companies.
The American GDP has contracted as much as 6.3% in the fourth quarter of 2008 — maximum in the last 26 years.
According to the Business Cycle Dating of NBER, the US economy slipped into recession in December 2007.
Recession is technically defined as two consecutive quarters of negative growth. However, the NBER broadly defines recession as a period when there is a significant fall in economic activity.
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.
“A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion,” the NBER had said in December 2008.
The NBER, which dates the nation’s economic cycles, pointed out that a peak in economic activity occurred in the US in December 2007.
The US has seen the collapse of over 46 banks since the country officially entered into recession.
Technically, the American economy has been in recession only last year, after the GDP shrunk consecutively in the third and fourth quarters, respectively.
During the September quarter, the economy declined 0.5% and by 6.3% in the October-December period.
Since December 2007, US GDP has seen two quarters of growth and two quarters of contraction. In the first and second quarters of 2008, the GDP grew by 0.9% and 2.8%, respectively.