By NEIL IRWIN • The Washington Post • December 2, 2008
WASHINGTON -- The U.S. economy entered a recession one year ago, a group of the nation's leading economists said Monday, and new evidence that the downturn will be deep and prolonged sent the stock market plummeting.
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The Dow Jones industrial average dropped 7.7 percent, or 680 points, on bleak economic reports, including one that showed that manufacturing activity in November was weaker than it had been since 1982. Investors plowed money into U.S. Treasury bonds, seen as safe havens in uncertain times.
Meanwhile, Federal Reserve Chairman Ben Bernanke indicated in a speech that he is inclined to keep cutting interest rates and using novel approaches to try to contain damage from the downturn. Treasury Secretary Henry Paulson said he is designing new programs to strengthen the financial system.
The pledges to take aggressive action come as the recession appears to be getting worse.
"Right now, we still seem to be in an accelerating downslope of this economic cycle," said Ethan Harris, head of U.S. economic research at Barclays Capital.
Economists with the nonprofit National Bureau of Economic Research announced Monday that that cycle began in December 2007, long before the health of the financial system deteriorated this spring. The group's Business Cycle Dating Committee, made up of seven academic economists, determines when a recession begins and ends, and is considered the arbiter of such things.
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