Dow hears recession, and cringes

All the major stock indexes race for the basement as economists finally dare to use the R-word

WASHINGTON -- Most Americans sorely knew it already, but now it's official: The country is in a recession, and it's getting worse.

Wall Street reeled at the news. The Dow plummeted 680 points, and all major indexes lost over 7 percent of their value, erasing much of last week's gains. Washington pledged even more help to try to ease the pain.

A fresh batch of bad economic reports added to the gloom.

* An index of manufacturing activity sank to a reading of 36.2 in November, a 26-year low, the Institute for Supply Management reported.

* Construction spending fell by a larger than expected 1.2 percent in October, the Commerce Department said.

The National Bureau of Economic Research concluded Monday that the country has been suffering through a recession since December 2007.

By one benchmark, a recession occurs when the gross domestic product declines for two straight quarters. But the bureau's dating committee uses more precise measures, including employment, personal income and industrial output.

The economy jolted into reverse in the final three months of last year. After a short spring rebound, it contracted again in the summer. The bureau's economists say it is still shrinking and will continue to do so through at least the first quarter of 2009.

Officials and politicians rushed to offer reassurance.

Federal Reserve Chairman Ben Bernanke said he stands ready to lower interest rates yet again and to explore other rescue or revival measures.

Treasury Secretary Henry Paulson pledged to take all the steps he can in the waning days of the Bush administration to provide relief. Specifically, Paulson is eyeing more ways to tap a $700 billion financial bailout pool.

House Speaker Nancy Pelosi, D-Calif., vowed to have a massive economic stimulus package ready on Inauguration Day for President-elect Barack Obama's signature.

President George W. Bush said he'd back more government intervention.