The level of underlying economic activity in the huge domestic US economy shows the country is now in recession.

The strong US export sector has stopped the US economy from officially using the “R” word, just as the strong Australian resource export sector is probably keeping our economy from heading towards the edge.

In a blizzard of figures and revisions, the US Commerce Department reported that the economy fell into a recession in the December quarter of 2007, staggered back to positive growth in the first quarter and then grew again in the June quarter, with the strong export performance keeping growth on the black side of the ledger.

The figures show that the economy expanded less than forecast in the June quarter as the impact of the housing slump and rising unemployment blunted the impact of nearly $US100 billion of tax rebates.

The economy grew at a 1.9% annual rate after expanding 0.9% in the first quarter (down from an initial estimate of 1%), the Commerce Department said in Washington. While that was a much faster pace than the US economy set in the first quarter, analysts had expected to see the economy grow at a 2.3% annual rate in the June quarter.

The report also showed a recession may have started in the final three months of 2007, as gross domestic product was revised to show a contraction in the period. The Commerce Department said revisions to past GDP numbers showed that growth shrunk 0.2% in the December quarter of 2007, instead of rising 0.6% in that quarter as has been reported for the past six months. The revisions for this year won’t appear until 2009, but it could be that the US economy is actually shown to have been in recession, or very close to it, since September 2007.

US economists say growth may weaken in the current quarter as unemployment increases, with government figures tonight, our time, forecast to show a seventh straight month of falling jobs: a loss of 70,000 is expected, which would take the total number of jobs lost so far this year to well past 500,000. The figures mean interest rate increases from the Fed are off, even if inflation remains around current levels of 5% or even higher.

The revisions by the Commerce Department reached back to 2005 and cut growth in that year, in 2006 and in 2007. But they did revise growth in the March quarter last year to 4.8% annual from 3.8%. Overall growth in 2007 was 2%, down from 2.2% previously reported. Before the December quarter of last year, the last time the US economy shrank was in the third quarter of 2001 during the last recession, when it contracted at an annual rate of 1.4%.