- WASHINGTON (Reuters) - The
struggling U.S. economy slid into recession in March and its condition
was worsened by the Sept. 11 attacks, a member of a panel of economists
that officially dates U.S. recessions said on Monday.
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- The announcement by the National Bureau of Economic
Research
confirmed that a record expansion that began in March 1991 -- after the
last nine-month recession that began in mid-1990 -- was snapped exactly
a decade later.
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- "The committee is satisfied that the total
contraction
in the economy is sufficient to merit the determination that a recession
is under way," the NBER's business cycle dating committee said.
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- It will be the 10th recession for the world's largest
economy since the end of World War Two.
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- The institution said economic activity peaked in March
2001, adding: "A peak marks the end of an expansion and the beginning
of a recession."
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- A recession is commonly defined as two straight quarters
of shrinking gross domestic product (GDP).
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- A member of the panel, Ben Bernanke, told Reuters the
key factor was that job creation had begun to falter, but added the
situation
had been aggravated by the hijack attacks of Sept. 11, which helped trigger
the recession call.
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- "The key factor was aggregate employment which
peaked
in March," Bernanke said. "The other factors related to
manufacturing,
such as industrial production. Sales peaked earlier, suggesting the
manufacturing
recession had already began, but only by March did it appear to have spread
to the rest of economy for a broader recession."
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- The panel carefully weighs all the factors involved in
assessing the pace of economic activity, and makes its call only when it
feels certain that growth has stalled. It knew the economy had slowed prior
to Sept. 11 but had not decided to call it a recession at that time.
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- "The attacks clearly deepened the contraction and
may have been an important factor in turning the episode into a
recession,"
the official NBER announcement said.
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- Bernanke said the economy was "very much on the
borderline" before the attacks but was tipped over by the Sept. 11
attacks, which effectively brought national commerce to a halt for a few
days and left lasting scars on sectors like airlines and the tourism
industry.
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- "Without Sept. 11 it would have been a very close
call," Bernanke said. "Sept 11 pushed us deep enough so that
it qualified as a recession."
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- President Bush, speaking to reporters at the White House,
said the declaration of a recession added urgency to the need to get a
package of economic stimulus measures approved by Congress and passed into
law.
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- "I knew the economy was not in good shape right
after I took office," said Bush, who was inaugurated in January.
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