Gerard Baker, writing in the Times (London) today says, “US economic activity is collapsing so fast that it is hard to keep up with just how bad things are. The various monthly data releases are ancient history by the time they are published, even the most up-to-date ones.”

The loss of half a million jobs in November was particularly calamitous. Nothing like it has been seen for 30 years or more.

The upcoming President, Barack Obama, promised last weekend to create 2.5 million jobs by a massive fiscal stimulus. This has to be set against the Bush stimulus last year which broadly had little effect. People simply tucked the money away, or paid off debt.

Obama wants to spend on roads and transport. He also wants money to go to green and information technology-based infrastructure.

Meanwhile the Fed has been using so-called “quantitative easing” in the wake of its dramatic cuts in interest rates. That means printing money and buying assets of all kinds. So far, nothing seems to be working.

Finally, when there are no more cliffs to fall off, we may see some “green shoots” of recovery.

Hold your breath if you dare.

The US has entered its first major economic recession for 16 years, according to investment bank Merrill Lynch.

Merrill is the first of the big banks to declare that a recession in the world’s biggest economy is already underway. David Rosenberg, the bank’s chief North American economist, claims that the weakening employment scene and declining retail sales show that the economy has tipped into its first month of recession. [A recession is defined as two successive months of negative growth].

Rosenberg says,”According to our analysis, this isn’t even a forecast any more but is a present day reality”.

For an analysis of the coming recession on both sides of the Atlantic see John Evans’s article in Syntagma.

He writes, “All banks are now hoarding cash like Ebeneezer Scrooge on a bad day and virtually ceasing to lend. With house price indices slithering down a slope like novice ice skaters, and inter-bank rates running at around 8 percent, this has become a total banking crisis worldwide, and that has the potential for real evil in our economies.”

Read the article here.

Pundits are still concerned that the worldwide credit crunch will not abate until the full extent of the U.S. sub-prime housing crisis is fully known.

Justin Urquart Stewart, at Seven Invesment Management said, “The market cannot start to get any composure until we can find out how much damage has been done.”

The prospect of millions of borrowers — mostly poor, black Americans — defaulting on payments they could never afford, has fueled concerns of a credit crunch, making it difficult for almost anyone to borrow money. The interbank lending market has been particularly badly hit.

In the three months to the end of June, Standard & Poor calculated that U.S. house prices fell by 3.2 percent, the steepest decline since 1987 when its records began.

For the first time in 16 years, U.S. house prices have fallen, raising fears over the economy. This could in turn have a knock-on effect on the rest of the world.

This doesn’t seem to be an isolated incident, as the UK Land Registry is reporting a long-expected fall in the British property market — a 1.1 percentage fall last month, bolstered only by buoyant figures for London.

Standard & Poor’s/Case Shiller Index reports that American values fell 1.4 percent in the first quarter compared with the same period last year. They were also down 0.7 percent on the final quarter of 2006.

The OECD (Organization for Economic Cooperation and Development) warned that the spillover effect could be “more pronounced than generally expected”.