US economy 'already in recession'

The US economy contracted 0.3% in the third quarter

The US economy is already in recession, according to two separate surveys.

Analysts surveyed by the National Association for Business Economists (NABE) said the recession was set to continue into 2009.

They also predicted the economy would shrink at a rate of 2.6% in the fourth quarter of the year, giving an annual growth rate of 0.2% for 2008 overall.

A separate survey from the Philadelphia Federal Reserve Bank survey said the recession would last for 14 months.

The US economy contracted at an annual rate of 0.3% from July to September, according to preliminary official data.

On Monday, Japan became the latest economy to fall into recession - reporting a second successive quarter of negative growth. Figures out on Friday showed that the eurozone was also now in recession.

Worsening outlook

The NABE survey polled 50 private professional forecasters.

"Business economists became decidedly more pessimistic on the economic outlook for the next several quarters as a result of the intensification of credit market stresses," said NABE president Chris Varvares, who is also the president of Macroeconomic Advisers.

The NABE study found 96% of respondents believed the US economy was already in recession.

The economists also predicted that the economy would shrink at a pace of 1.3% in the first quarter in 2009, and would grow by just 0.7% over the year as a whole.

"Despite the hefty liquidity injections by the Fed and the Treasury, the majority of NABE panelists believe that tight credit conditions will continue," Mr Varvares said.

The NABE survey predicted the unemployment rate could peak at 7.5% by the third quarter of 2009 compared with the current 14-year record high of 6.5%.

According to a quarterly survey of professional forecasters by the Philadelphia Federal Reserve Bank, the US economy went into a recession in April this year that will last for 14 months.

The surveys indicate that President-elect Barak Obama will face a tough challenge to revive the economy when he takes office.

On Saturday, Mr Obama urged Congress to take immediate steps to tackle the US economic crisis.

Speaking in a Democratic Party radio and online address, he said action should be taken "right now" to alleviate the pain of millions of working Americans.