No kidding.

What's been obvious for months became official Monday: The recession is here.

It's already a year old nationally, in fact – and probably even older in California. What's uncertain is how long it will last and how bad it will get.

"Most people have given up on the idea that it'll be mild," said Howard Roth, chief economist at the California Department of Finance.

The official declaration came from the National Bureau of Economic Research, a private organization in charge of locating the turning points in the business cycle. The national recession started last December, it said.

The announcement, plus mixed results from the post-Thanksgiving holiday shopping and a big decline in the Institute for Supply Management's manufacturing index, sank the stock market. The Dow Jones average plunged 679.95 points, recording the fourth-worst point drop ever and erasing half of last week's gains.

Roth and economist Jeff Michael, of the University of the Pacific, said it's likely that California entered the recession sometime sooner than the rest of the country. It's possible that places like Sacramento, where the housing market seems to be stabilizing, could come out of it earlier, as well.

But the immediate future is bleak. Gov. Arnold Schwarzenegger declared a fiscal emergency and summoned the Legislature into special session to deal with the deficit, job losses and mortgage problems. The state has one of the worst foreclosure rates in the nation, and unemployment has risen to 8.2 percent. Sacramento unemployment is 7.9 percent.

The downturn is already longer than the dot-com recession of 2001, which lasted eight months.

It's not unusual for the National Bureau of Economic Research to make its official call several months after a recession begins. While most analysts say a recession consists of two straight quarters in which the gross domestic product declines, the bureau takes a broader view. It defines a recession as a "significant decline in economic activity spread across the economy, lasting more than a few months."

GDP shrank in the last quarter of 2007, then rose for two quarters before contracting again from July through September.

The bureau wouldn't predict when the recession will end. Michael, director of business forecasting at UOP, pegged it at the third quarter of 2009 – at the earliest.

Making a precise prediction is tough. A complicating factor is that while the first few months of the recession were "pretty mild stuff," the financial crisis that began in September has worsened the economy. "Things have deepened substantially in recent months," he said.

Roth said the economy won't improve until the chaos in the financial markets ends and credit markets recover. Credit has tightened considerably because lenders, choking on bad mortgages, are clamping down on consumer, housing and business lending.

The Federal Reserve's decision last week to pump $800 billion into the credit markets pushed mortgage rates below 6 percent.

That could boost Sacramento's housing market, which already was starting to revive. Although prices keep falling, sales volume has risen seven consecutive months as buyers devour deeply discounted bank-owned properties.

Alan Wagner, president of the Sacramento Association of Realtors, said real estate can lead the region out of recession – just like it led the region into it.

"We're the root of evil," said Wagner, an agent with Re/Max Gold in Elk Grove. "Housing is where it started."

Fed Chairman Ben Bernanke said Monday that additional cuts in interest rates are possible, a move that real estate agents would welcome. "We'll bring the economy with us if we can move a house," Wagner said.

Roth said Sacramento's housing market might be recovering earlier than most. But the economy won't really shape up until prices stabilize and homeowners feel better, he said.

Many believe the economy's problems have gone beyond housing and morphed into a broad-based consumer downturn. Auto sales are off 24 percent in California this year.

To help consumer spending, Michael said Congress needs to pass a major economic stimulus package similar to what President-elect Barack Obama has proposed. A package tailored around tax cuts could help lift the economy by next spring or summer, he said.

It's unlikely that holiday shopping will bring meaningful relief. The National Retail Federation said post-Thanksgiving spending actually jumped 7.2 percent from a year earlier, but it was clear that merchants were paying a heavy price to lure shoppers.

Black Friday discounts were the heaviest in history for some merchants. Major discounting continued on Cyber Monday as retailers tried to juice up online shopping.

Analysts said retailers will have to sell considerably more goods to make up for the dollars they've surrendered in the form of promotions.

Arden Fair merchants were "very pleasantly surprised" with their weekend results, said the mall's senior marketing manager Jennifer Pruitt.

But she added, "It's very clear that price is the driver."

Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.