WASHINGTON — It's official: This recession is the worst the United States has experienced in more than 25 years, the government said Friday. And it appears likely to get worse before it gets better.
At the White House, where the new administration is working on a broad strategy to combat the crisis, President Obama described the downturn as "a continuing disaster for America's working families."
"The recession is deepening and the urgency of our economic crisis is growing," Obama said as he announced the formation of a task force to address the strains on the middle class.
"But I believe if we act boldly and swiftly it can be an American moment, when we work through our differences together and overcome our divisions to face this crisis."
In the coming weeks, the White House will unveil regulatory measures aimed at preventing future financial crises. As early as next week, it will announce rules that would bar Wall Street firms receiving bailout money from paying large bonuses to executives. The president this week termed such largess "shameful."
The first days of Obama's presidency have been dominated by the economy, and the latest news from the Commerce Department provided fresh evidence of trouble.
The government reported that gross domestic product -- the value of all goods and services produced in the economy -- declined at a precipitous 3.8% annualized rate in the fourth quarter of last year.
That was the steepest drop since a 6.4% decline in 1982, easily surpassing the downturns seen during the 1990-91 and 2001 recessions.
It also provided the second consecutive drop in GDP, after the 0.5% drop in the third quarter of 2008.
Two consecutive drops in GDP is generally considered proof of recession. The National Bureau of Economic Research, however, has already officially declared that the recession began at the end of 2007 based on job losses and other factors.
Before Friday's announcement, many economists had predicted that fourth-quarter GDP would be down by 5% or more. It wasn't, but only because of unexpected growth in inventories. That means companies are likely to cut back even further in the months to come to clear those stockpiles.
"Unfortunately, this is a head fake," said Diane Swonk, chief economist at Mesirow Financial in Chicago. "This is still an economy that is deteriorating rapidly. That has not changed."
