Merrill Lynch economist David Rosenberg has stated what his many peers amongst the forecasting and economist community have been predicting for long - after 16 years, the United States has finally stepped into recession. Rosenberg 's assertion comes soon after the release of employment figures by the US Labour Department in its monthly report last Friday (5 January 2007).

"According to our analysis, this (recession) isn't even a forecast any more but is a present day reality," he says, pointing to the four key barometers used by the National Bureau of Economic Research (NEBR) - employment, real personal income, industrial production, and real sales activity in retail and manufacturing.

Rosenberg says these "seem to have peaked around the November-December period, strongly suggesting that we are actually into the first month of a recession."

According to Rosenberg, there has not been a time in the past 60 years where the unemployment rate has gone up 60 basis points from a cycle-low without the economy slipping into recession. The unemployment rate hit 5 per cent in December, up from 4.4 per cent in March 2007.

Looking at the data released last Friday, Rosenberg also points to the length of time the jobless have remained unemployed, with the number of people out of work for 15 weeks or more increasing by 20 per cent year on year. According to Rosenberg, this is a pace that prevailed in the early stages of previous economic downturns in April 2001 and August 1990, when the recessions were also one-month old.

Other features pointing to the onset of a recession, says Rosenberg, are aggregate hours worked in the economy, which has contracted at a 0.4 per cent annual rate in the fourth quarter of 2007. The level of unemployment, year on year, is up 13 per cent, which according to Rosenberg, is another pointer that the recession has already began.

"This isn't about 'labels,'" Rosenberg says. "What is important about recessions is that while each may have its own set of particular characteristics, there are also unmistakable investment patterns that emerge time and time again."

"Friday's employment report strongly suggests that an official recession has arrived. The recession dating committee at the National Bureau of Economic Research will be the final arbiters but since it waits for conclusive evidence it may be at least two years before we are notified."

Rosenberg's assertion comes on the heels of a Morgan Stanley report in November last year, which warned that recession was already well on its way.

(Also See: Recession in the US: The perfect storm arrives and After Merrill, Goldman Sachs issues "outright recession call" for 2008)