Global developed markets officially sank into recession during the final quarter of 2008. The
United States, Japan, the Euro Zone and the United Kingdom all posted dismal growth
outcomes pulling equity markets down a further 20%. The quarter was characterized by bold
moves in monetary policy as central banks embarked on aggressive rate cutting cycles while
the fiscus was beset with demands for economic stimuli programmes. Uncertainty in the
latter contributed to much volatility in financial markets ending the year with risky asset
classes deep in the red.

The Business Cycle Dating Committee of the National Bureau of Economic Research
(NBER) maintains a chronology of the beginning and ending dates of U.S. recessions. The
committee determined that a peak in economic activity occurred in the U.S. economy in
December 2007. The peak marks the end of the expansion that began in November 2001
and the beginning of a recession. In essence, the US has been in recession for the whole of
2008. The NBER defines a recession as a significant decline in economic activity spread
across the economy, lasting more than a few months, normally visible in production,
employment, real income, and other indicators. Given that a recession is a broad
contraction of the economy, not confined to one sector, the committee emphasizes
economy-wide measures of economic activity where domestic production and employment
are the primary conceptual measures of economic activity. The committee views the payroll
employment measure, which is based on a large survey of employers, as the most reliable
comprehensive estimate of employment. This series peaked in December 2007 and has
declined every month since then.(1)

The US Bureau of Labour Statistics has recently revealed that Nonfarm payroll employment
declined sharply in December and that the unemployment rate rose from 6.8 to 7.2%.
Specifically, payroll employment fell by 524,000 over the month of December and since the
start of the recession in December 2007, the number of unemployed persons has grown by
2.6 million and the unemployment rate has risen by 2.3 percentage points. Furthermore, job
losses have been widespread across most major industry sectors. Specifically in December,
large job losses continued in manufacturing, construction, and employment services while
health care continued to add jobs. The graphic below highlights the severity of the latest US
recession as the unemployment rate has reached a 16 year high and the job losses in 2008
are at levels not seen since the mid forties.

(1) www.nber.org