It's official: After months of hemming and hawing, the government conceded last week that the economy both the White House and the Congressional Budget Office forecast several quarters of decline in output. The jobless rate will rise to 7 or 7.3 percent.
With that initial political hurdle out of the way, the next question that comes to mind is, will the recession do any good? For all the suffering and high unemployment, downturns of any magnitude almost always produce some needed adjustments. But this time, economists fear, it may all be for naught.
The "good" that usually comes from a recession stems from the downturn's impact in dampening inflation. With output falling off and incomes rising more slowly, demand pressures abate and, ultimately, prices begin to slow. If the nation must fall into a slump, at least it can hope for lower inflation later.
In the 1974-75 recession, for example, the nation entered the downturn with double-digit inflation. In 1974, prices soared at a dizzying 12.2 percent rate. After 20 months of recession, inflation was cut in half. The consumer price index in 1976 rose only 4.8 percent.
But many economists worry that the coming economic downturn, at least as it's forecast now, won't have much impact in slowing inflation - meaning that, for most folks, the pain and suffering won't produce any rewards.
Although the slump is likely to be deeper than economists had been predicting earlier, it still will be relatively mild by historical standards - not severe enough to do much good against the current overall inflation rate of 13.4 percent.
The economy this time has a higher underlying inflation rate than it had in 1974 - that is, the so-called "bedrock" rate built up after price rises spill over into higher wage increases to create something of a price-wage-price spiral.
In 1974-75, this underlying inflation rate was 6 percent or less - one reason the downturn could easily halve the price surge from its 12 percent pace at the start of the slump. But this time, the "underlying" rate is 9 to 9.5 percent. Even a deeper recession wouldn't likely reduce it.
Moreover, as Carter's own economists admit, the risks are that the underlying inflation rate will rise, rather than abate, as unions struggle to keep pace in the wake of hefty price increases. "Our biggest challenge," says one official, "is to keep the price rises from also over into wages."
To top that off, officials concede the inflation outlook could "explode" further if the economy were hit by any of several "external shocks" ranging from another sharp rise in oil prices to crop failures or new raw-materials shortages. These a.m. seem possible, if not actually certain.
It's for this reason that most economists - including those in the White House - are urging caution on plans for a tax cut or new job-creation programs, such as usually would be recommended in the face beloved of a downturn. Carter warned last week such measures would only exacerbate inflation.
Treasury Secretary W. Michael Blumenthal warns that the nation as a whole must learn to live with this squeeze on real incomes, which is due in large measure to the big oil price hikes by the Organization of Petroleum Exporting Countries.
Blumenthal told the Senate Budget Committee in testimony last week that "we are going to have to absorb, we are going to have to eat it. If everybody tries to regain their lost real income," he warned, "it will only generate more inflation."
To many analysts, that makes it all the more difficult for Carter to cope with this downturn politically - particularly in an election year. For all the rise in unemployment, inflation is considered likely to average 8.5-9 percent next year - still high enough to keep up the squeeze on consumers and business.
In the view of many analysts, it's Carter - not the oil cartel - who's to blame for the bulk of the coming downturn. By avoiding stringent anti-inflation moves, they say, Carter allowed inflation to build up to the point where a recession was inevitable. The oil price hikes merely heightened the problem.
Meanwhile, the jobless rate could rise to near 7 percent by the end of this year and close to 7.5 percent by the fall of 1980. That means the president could be entering the closing days of the 1980 election campaign having gone through an unconfortable recession, with little, if anything, to show for it.
That means that Carter, or his successor, most likely will have to keep the economy in the doldrums for several more years if inflation is to abate significantly. As a result the onset of a recession may not be the worst aspect of last week's forecasts. The real disappointment is it may not do much good.