Federal Reserve Chairman Ben Bernanke is expected to ratchet down a key interest rate - now near a historic low of 1 percent - by as much as a half-percentage point on Dec. 16 in a bid to breathe life into the moribund economy. Bernanke is exploring other economic revival options and wants the government to step up efforts to curb home foreclosures.
Treasury Secretary Henry Paulson, whose department oversees the $700 billion financial bailout program, also is weighing new initiatives, even as his remaining days in office are numbered.
Obama, who takes office on Jan. 20, has called for a massive economic recovery bill to generate 2.5 million jobs over his first two years in office. House Speaker Nancy Pelosi (D., Calif.), has vowed to have a package ready on Inauguration Day for Obama's signature.
The measure, which could total $500 billion, would bankroll big public works projects to create jobs, provide aid to states to help with Medicaid costs, and provide money toward renewable-energy development.
At 12 months and counting, the recession is longer than the 10-month average length of recessions since World War II. The record for the longest recession in the postwar period is 16 months, which was reached in the 1973-75 and 1981-82 downturns. The current recession might end up matching that or setting a record in terms of duration, analysts say.
The 1981-82 recession was the worst in terms of unemployment since the Great Depression. The jobless rate rose as high as 10.8 percent in late 1982, just as the recession ended, before inching down.
Given the current woes, the jobless rate could rise as high as 8.5 percent by the end of next year, some analysts predict. Projections, however, have to be taken with a grain of salt because of all the uncertainties plaguing the economy. Still, the unemployment rate often peaks after a recession has ended. That's because companies are reluctant to ramp up hiring until they feel certain the recovery has staying power.
