The Bush Legacy: U.S. Slump May Be Longest in Decades as Growth Fell Off 'Cliff'

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Nov. 12 (Bloomberg) -- The U.S. downturn will be the longest in three decades, and the drought in consumer spending may be the worst ever, according to economists surveyed by Bloomberg News.

...

"The economy fell off a cliff in October,'' said Richard Berner, co-head of global economics at Morgan Stanley in New York. "We had a huge financial shock that intensified the credit crunch and triggered a sharp downturn.''

Declines in household spending will extend into next year as the worst financial crisis in seven decades forces employers to keep cutting payrolls on top of the 1.2 million jobs already lost this year.

...

Berner is among economists projecting the current slump will be the most serious in a quarter century as the lack of credit causes a reinforcing, vicious circle of declines in confidence, spending and hiring.

"All of these adverse feedback loops are working to reinforce the downturn,'' he said. ``At the moment, it looks like the deepest U.S. recession since '81.''

Some members of the group that officially determines when U.S. contractions begin and end are even more pessimistic.

"We're in for a pretty serious recession,'' Jeffrey Frankel, a member of the business-cycle dating committee of the National Bureau of Economic Research, said in a Nov. 10 interview with Bloomberg Television. "There's a chance it'll be the worst postwar recession.''

http://www.bloomberg.com/apps/news?pid=206...&refer=home

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