One of President George W. Bush's top economic advisers said Sunday that parts of the country probably already are experiencing a recession and it could take a few months before the clogged credit system starts working again.

Section: Smart Savings

Many analysts predict the economy could contract over the final three months of this year and in the first 90 days of 2009. That would meet the classic definition of a recession - two consecutive quarters of economic contraction. Some economic analysts say the sagging economy already is in recession.

The White House has been loath to use that word, both because the technical definition has not been met and because it carries such negative weight.

Speaking in a broadcast interview Sunday from California, the chairman of the White House Council of Economic Advisers noted that national unemployment stands at 6.1 percent. Ed Lazear said some parts of the country, such as California, have even higher rates of people out of work.

"We are seeing what I think anyone would characterize as a recession in certain parts of the country," Lazear said.

The White House and Congress hope a $700 billion rescue plan will inject cash and confidence into the lending industry and recharge the economy. Bush repeatedly has told the nation that it will take a while for credit lines to thaw.

Lazear gave a slightly more specific time frame, saying it would take "a few months before we really see a significant impact."

"But we've seen impacts already," he said. "What we're seeing is that banks are now willing to lend to one another. That's a huge plus for the economy because the big problem has been that banks have been unwilling to trust one another."

Democratic lawmakers plan to consider a postelection stimulus package that could cost as much as $150 billion. Lazear said some of the ideas being proposed, such as road and bridge projects, are too slow and too focused on one industry to give the economy a boost.

"They may be good policy. That's something that Congress has to decide," he said. "But we can't really think of that as a stimulus that's going to get the economy turned around in the short run."

Lazear spoke on CNN's "Late Edition."

The word "recession" has been kicked around for months and now, an even scarier term, "depression," has creeped back into the American vernacular following the recent stock market crash and a $700 billion government bailout of Wall Street.

So what officially determines whether the country is in a recession or depression?

Recession

According to the Web site economist.com, a recession is "a period of slow or negative economic growth, accompanied by unemployment."

The site said that economists generally have two precise definitions of a recession. The first, which they say is harder to prove, is when the economy is growing at less than its long-term growth and has spare capacity. Capacity is defined by the site as "the amount a company or an economy can produce using its current equipment, workers, capital and other resources at full tilt."

Secondly, recession is defined by economists as "two consecutive quarters of falling Gross Domestic Product" or GDP.

The GDP is a measure of economic activity in a country.

If a recession is long enough, it can slip into a depression.

Depression

Economically speaking, the word "depression" is most often associated with the Great Depression of the 1930s, which was preceded by the Wall Street stock market crash on Oct. 29, 1929.

According to the economist.com, a depression is defined as "a bad, depressingly prolonged recession in economic activity."

Putting a recession and depression into perspective, the site noted that "textbook definition of a recession is two consecutive quarters of declining output. A slump is where output falls by at least 10 percent; a depression is an even deeper and more prolonged slump."

Boiling down what led to and defined the Great Depression, the site said that following the great growth of the Roaring '20s and the Wall Street crash in 1929, output fell by 30 percent and unemployment soared and stayed high. As the Great Depression wound to its end a decade later, the unemployment rate was at 17 percent and nearly half of the nation's 25,000 banks had failed.