Parts of U.S. in recession, White House aide says

WASHINGTON — One of President Bush’s top economic advisers said Sunday that parts of the country probably already are experiencing a recession and it could take a few months before the clogged credit system starts working again.

Many analysts predict the economy could contract over the final three months of this year and in the first 90 days of 2009. That would meet the classic definition of a recession — two consecutive quarters of economic contraction. Some economic analysts say the sagging economy already is in recession.

The White House has been loath to use that word, both because the technical definition has not been met and because it carries such negative weight.

Ed Lazear, the chairman of the White House Council of Economic Advisers, noted that national unemployment stands at 6.1 percent. Speaking in broadcast interviews Sunday, Lazear said some parts of the country, such as California, have even higher rates of people out of work.

“We are seeing what I think anyone would characterize as a recession in certain parts of the country,” Lazear said.

The White House and Congress hope a $700 billion rescue plan will inject cash and confidence into the lending industry and recharge the economy. Bush repeatedly has told the nation that it will take a while for credit lines to thaw.

Lazear gave a slightly more specific time frame, saying it would take “a few months before we really see a significant impact.”

“But we’ve seen impacts already,” he said. “What we’re seeing is that banks are now willing to lend to one another. That’s a huge plus for the economy because the big problem has been that banks have been unwilling to trust one another.”

Democratic lawmakers plan to consider a postelection stimulus package that could cost as much as $150 billion. Lazear said some of the ideas being proposed, such as road and bridge projects, are too slow and too focused on one industry to give the economy a boost.

“They may be good policy. That’s something that Congress has to decide,” he said. “But we can’t really think of that as a stimulus that’s going to get the economy turned around in the short run.”