Economists Say Recession Started In December 2007

December 1, 2008 3:48 p.m. EST

Cambridge, MA (AHN) - Tumbling manufacturing in November indicates the U.S. recession, which economists now say officially started in December 2007, is likely to continue for a while.

Cambridge, MA-based Institute for Supply Management released its latest manufacturing index on Monday, revealing that factory output in the United States dropped 2.7 points in November to 36.2.

Readings below 50 indicate a contraction in the manufacturing sector of the economy.

Also on Monday, The National Bureau of Economic Research said the nation has officially been in recession since the end of last year.

NBER, a private group of leading economists, is tasked with dating the official beginning and end of economic downturns.

Because of the need to look at final readings of various economic measures, it takes a long time after a recession has begun to declare one is occurring.

"The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment," NBER officials said in a statement Monday. "This series reached a peak in December 2007 and has declined every month since then."

Economists predict that government figures will show another 325,000 jobs were lost in November on top of the 1.2 million jobs the NBER verified were lost during the first 10 months of the year.

ISM officials said Monday that new orders decreased in November, dropping to 27.9 from 32.2 in October, which was their lowest level since 1980. The new order index is a reflection of near-term activity over the next 30 to 60 days.

To put that into perspective, the new order index has only dropped below 30 only three times in the 60-year history of the ISM survey.

"Each time that has happened the overall ISM was at or would soon fall below 31," J.P. Morgan Chase economist Michael Feroli wrote in a note to clients. "Today's ISM points to one of the deepest contractions in industrial output in the post-World War II era."