U.S. Slump May Be Longest in Decades as Growth Fell Off `Cliff' (Bob Willis, Kelly Scheuble)

Nov. 12 12:01AM (Bloomberg) -- The U.S. downturn will be the longest in three decades, and the drought in consumer spending may be the worst ever, according to economists surveyed by Bloomberg News. 

The implosion of credit markets last month will cause the economy to shrink at a 3 percent annual rate in the fourth quarter and decline at a 1.5 percent pace in the first three months of 2009, according to the median estimate of 59 economists surveyed Nov. 3 to Nov. 11. Following last quarter's 0.3 percent drop, the slump would be the longest since 1974-75. {xtypo_quote_right} "We're in for a pretty serious recession," Jeffrey Frankel, a member of the business-cycle dating committee of the National Bureau of Economic Research, said in a Nov. 10 interview with Bloomberg Television. "There's a chance it'll be the worst postwar recession."  {/xtypo_quote_right}

"The economy fell off a cliff in October," said Richard Berner, co-head of global economics at Morgan Stanley in New York. "We had a huge financial shock that intensified the credit crunch and triggered a sharp downturn."

Declines in household spending will extend into next year as the worst financial crisis in seven decades forces employers to keep cutting payrolls on top of the 1.2 million jobs already lost this year. President-elect Barack Obama has said the U.S. needs a second economic stimulus package "sooner rather than later."

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