University of Michigan economic forecasters confirmed today what many Americans already suspected, that the nation has tumbled into a "moderately severe" recession.

In a chilling forecast for Michigan’s signature industry, the U-M economists predicted the sale or cars and trucks will “continue to plunge” next year, falling from 16.1 million in 2007 and 13.3 million this year to a 25-year low of 12.2 million in 2009. They expect sales to improve to 13.6 million in 2010.

Led by economist Joan Crary, the U-M forecasters predicted that the nation's labor and housing markets would continue to decline in 2009 and show only a sluggish recovery in 2010.

A key to avoiding an even more serious recession, Crary said at U-M's annual economic forecast in Ann Arbor, was an early passage of a significant package of fiscal stimulus measures, including infrastructure spending and tax cuts.

"While the current financial crisis is an extreme event that has raised fears of economic collapse, we are not forecasting economic catastrophe but rather a recession that is best characterized as moderately severe," Crary said.

Specific forecasts include the prediction that the nation will lose another 2.4 million jobs over the next year and a half on top of about 1 million lost so far this year.

Crary said this recession will rank about midway in severity with post-World War II downtowns, more severe than the milder recessions of 1990-91 and 2001 but less troublesome than the deep declines of 1974-75 and 1981-82.

Contact John Gallagher at (313) 222-5173 or gallagher@freepress.com.