Private research group says US economy has been in recession for a year.
In the US, the Dow Jones industrial average lost nearly 700 points or eight per cent on Monday, wiping out more than half of last week’s big gains amid a litany of bad economic indicators confirming that the US economy was in recession.
The US National Bureau of Economic Research, a private non-profit group of economic analysts, concluded that the country’s 73-month economic expansion had come to an end in December 2007.
The bureau did not forecast the duration of the recession.
“There is significant weakness in resources. The fact that [the] US has called a recession … highlights the concerns for global economy,” Savanth Sebastian, an equities economist with Commsec, said.
The White House acknowledged the report but did not refer to the current economic crisis as a recession.
In Australia, the central bank slashed interest rates on Tuesday by one percentage point in another attempt to stave off a recession.
The reduction was the fourth in a row by the Reserve Bank of Australia and took the cash rate to 4.25 per cent.
Analysts had expected a 0.75 percentage point cut on Tuesday.