Recession has arrived, say analysts

The U.S. economy is in a recession, a Merrill Lynch & Co. Inc. economist wrote in a research note to clients this morning. "Friday's economic report confirmed our suspicions that the economy was transitioning into an official recession towards the end of the year," David Rosenberg wrote. The report was released after the Department of Commerce said on Friday that the economy added only 18,000 new jobs in December and the unemployment rate increased to 5.0%, up from a 4.7% reading in November. "At no time in the past 60 years has the unemployment rate risen 0.60% from the cycle low without the economy slipping into recession, and here we now have the jobless rate hitting 5% percent in December versus the March trough of 4.4%," Mr. Rosenberg wrote. Morgan Stanley economists Richard Berner and David Greenlaw today also opined that the economy is in a recession, according to published reports. "The key question now is how deep the recession will be and how long it will last," Mr. Berner and Mr. Greenlaw wrote. Speaking to the Rotary Club of Atlanta today, Atlanta Federal Reserve president Dennis Lockhart also expressed alarm. "The negatives in our economy may be gaining momentum," he said. "I think these circumstances call for policymakers to be prepared to respond pragmatically to whatever developments arise."