The NBER has declared 2007 the start of the latest recession. Unemployment was the main reason cited for the declaration. The unemployment rate of 6.5% shows that the economy is producing less that the full employment GDP. Consistent with the model, prices have fallen to 214.935 a full .1% from August 2008. When employment drops, many other macro stats follow. New Orders for Manufactured Goods, New Orders for Manufactured Durable Goods, Business Inventories, Retail Sales, Producer Price Index for Finished Goods,Wholesale Inventories, Housing Starts are all down. Given the wage rigidity of contracts that will expire in the future, wages will be slow to adjust. We are going to be in this recession a long time.