The Bush administration yesterday used the dreaded "R" word.

Following four months of steadily eroding economic indicators, a period that administration officials dubbed a "slowdown" or a "lull" and which Federal Reserve Chairman Alan Greenspan called a "meaningful downturn," an administration official has conceded that the economy is in a recession.

Speaking yesterday on NBC's "Today Show," Michael Boskin, chairman of the President's Council of Economic Advisers, said that "it does appear that, after the longest economic expansion in the peacetime history of the United States, that the economy probably has entered a recession."

Later, White House spokesman Marlin Fitzwater called it "a recessionary kind of period."

Administration sources said yesterday that the preliminary forecast being used to prepare Bush's budget for the 1992 fiscal year will show the nation's economic output declining at a 3.4 percent annual rate during the final quarter of 1990 and at a 1.3 percent rate during the first quarter of 1991. A recession is defined as two consecutive quarters of economic contraction. The last recession was in 1982.

Boskin said yesterday, however, that he expects the recession "will be relatively short" and that the last three months of 1990 would be the worst quarter.

President Bush, in a taped interview with David Frost broadcast last night, said, "In some areas, we're clearly in a recession ... " Bush added that he believes that "the recession will be mild and that the whole country will come out of it in not too many months from now."

Boskin has previously pointed to lean business inventories as a reason for believing the recession will be brief -- a large inventory overhang would prolong layoffs and postpone new orders. In addition, he said, the relatively modest core inflation rate, the rate that excludes volatile oil and food prices, gives the Federal Reserve Board greater "elbow room" to lower rates and stimulate the economy.

The Fed has been easing interest rates over the past two months, and yesterday major banks responded by cutting their prime rates from 10 percent to 9.5 percent. {Details, Page E1.}

The recession label used by Boskin does not come as news to most of the nation's businesses, employees or economists. Last month, the National Bureau of Economic Research, the official referee of the country's economic cycles, said the economy probably peaked sometime between June and September and that it was "likely" that that period marked "the onset of a recession." The bureau did not formally declare the economy to be in recession, saying it needed to watch the data a little longer.

Lyle Gramley, chief economist for the Mortgage Bankers Association of America, said that "the administration gains credibility" by acknowledging the current recession. Gramley said Boskin is "just being realistic. You can only go so long. Eventually you lose all credibility."

Administration members maintain it is unusual for officials to declare that a recession is in progress before final economic statistics show two straight quarters of downturn.

Boskin lay part of the blame for the recession on the Persian Gulf crisis and the increase in oil prices that took place following Iraq's invasion of Kuwait on Aug. 2. "We said ... back in August that the economy, which was suffering already from high worldwide interest rates and tight credit conditions ... would take a hit in the fourth quarter from the oil shock," Boskin said. "We weren't sure how large that would be. It now looks like it's likely to be substantial."

Boskin said that the speed of the economic recovery also hinges, in part, on events in the Middle East. "It's clear that the sooner the oil situation is resolved -- and that depends, obviously, on a resolution of the situation in the Persian Gulf -- the sooner oil prices come back down {and} the sooner this big drag on the economy will be removed."

Other economists also stress that a resolution to the Persian Gulf crisis would eliminate economic uncertainty and restore business confidence.

Even so, some economists have argued that the economy might endure a prolonged slowdown because it could take time to reduce the high levels of debt built up by individuals, corporations and the federal government during the 1980s.

Debt "is clearly a factor," said Gramley, "and it is one that none of us knows how to evaluate. We have never lived through anything like this before."

Yesterday, a widely watched survey of industrial purchasing managers showed that orders declined in December for the third consecutive month. Also, the Commerce Department said that the level of construction spending in November fell to its lowest point in 11 months.