Four Oaks — Although the U.S. government has not said the word aloud, Dr. Harry Davis has no doubt the country is in recession.

Davis is professor of banking and economics for the N.C. Bankers Association. Last week, in a program sponsored by Four Oaks Bank, he spoke on “The Rescue Plan and Economic Outlook.”

The National Bureau of Economic Research decides when a recession has begun, Davis said. The bureau looks at employment, industrial production, personal income, sales activity and gross domestic product. Most recessions last 10 months, but Davis thinks this downturn will last 16 to 18 months.

“Our economy in North Carolina slammed into a wall about eight or nine months ago,” Davis said. “I don’t want to be real pessimistic about things, but I think we will have a relatively long recession.”

The U.S. economy faces many problems, including the struggling housing market, Davis said. A few years ago, builders were cranking out 2 million homes per year. But as of October, the average was 791,000 units annually. Davis does not think the housing market will improve until the second half of 2009.

“We finally put everyone we could think of in a house, people who couldn’t afford a house and didn’t have a stable relationship, until we drove it up to a number we could not sustain,” Davis said. “The second problem with housing is during the 1990s, incomes grew faster than home prices. That changed after 2001. When you put those two things together, that is why housing had to finally come apart.”

The government needs to make policies that would free the United States from dependence on foreign oil, or it should raise the gas tax, Davis said. “It is the only thing to get you out of your pickup truck, stop buying SUV’s and get you to work close to where you live,” he said. “The only thing for energy independence is higher prices.”

The jobless rate is heading up as the economy goes down, Davis said. Job losses through the year total 1.2 million. For the past 20 years, the unemployment rate has averaged 5.5 percent. Davis expects it will hit 8 or 9 percent soon.

Still, the numbers could be worse, Davis said. “Our unemployment rate is about half the rest of the world,” he said. “If you want to see unemployment, go to other countries. As bad as we sort of think things are, if you actually get up and get out of the United States and go to a foreign country, it’s a whole lot worse.”

So how will the United States pull out of the recession?

“We have spent the last 20 years as a nation seeing how much debt we could get ourselves into,” Davis said. “People, companies and the government are up to their eyeballs in debt. The word you will hear a lot about is deleverage. We are going to have to deleverage our debt levels. That is our consumers and businesses, and ultimately that will allow us to turn the economy around.”