Washington  - The United States has been in a recession since December 2007, the country's official arbiter of economic growth said Monday, confirming the long-held views of many economists as the country grapples with a debilitating financial crisis.

The announcement by the National Bureau of Economic Research (NBER), a private grouping of the country's top economists, marks the first recession in the United States since 2001, ending more than six years of expansion.

The NBER said it had rated the world's largest economy in recession after a private conference call between its seven-member committee held on Friday.

"The committee determined that the decline in economic activity in 2008 met the standard for a recession," NBER said in a statement on its website.

US stocks traded sharply lower on Monday. The Dow Jones Industrial Average plunged nearly 8 per cent.

Treasury Secretary Henry Paulson downplayed the news, saying that a recession did not change the government's response to the economic crisis.

"The thing that we have known ... is that we are in an economy that has slowed down significantly," he told a business forum in Washington. The economists "will decide what to call it."

According to government estimates, the US economy contracted by 0.5 per cent in the third quarter but grew by 2.8 per cent from April to June. Some economists have forecast a drop of as much as 5 per cent in the current quarter.

A recession is typically rated as two straight quarters of contracting growth, but the NBER stressed that its evaluation included much broader indicators and that gross domestic product was only one gauge of economic activity.

The NBER's analysis focuses principally on domestic production, which includes GDP, and employment, both of which have fallen dramatically in the midst of the country's worst financial crisis since the Great Depression.

More than 1.2 million jobs have been lost so far this year - more than half in the third quarter - and the country's unemployment rate has climbed to 6.5 per cent.

The International Monetary Fund has also forecast a recession for 2009. President-elect Barack Obama, who takes office January 20, is preparing a massive new fiscal stimulus package he hopes will jump- start the US economy.

The economy has been pulled down by a collapse in the US mortgage market, which was brought on by excessive risks taken by financial institutions in handing out loans to homeowners that could not afford them.

The Bush administration has already invested unprecedented amounts of money and taken equity stakes in private banks to keep them afloat. A 700-billion-dollar rescue plan passed by Congress in October was the largest in the country's history.

Both Paulson and Federal Reserve Chairman Ben Bernanke on Monday defended the US free-market system and the current's administration's actions to ease the economic crisis.

Bernanke cited "tentative signs" that financial markets were stabilizing but acknowledged that economic growth "will probably remain weak for a time" in a speech before the Austin, Texas, Chamber of Commerce.

A further cut in interest rates, already down at 1 per cent, was "certainly feasible" as the Fed continues to look for ways to boost lending, Bernanke said.

The NBER's Business Cycle Dating Committee is chaired by Robert Hall of Stanford University and includes economists from Harvard University, Northwestern University, the University of California and the New York-based Conference Board. (dpa)