THE US economy is suffering its steepest downturn since at least the 1970s and could descend into a depression, Jeff Immelt, General Electric’s chief executive, warned yesterday.

He said businesses and consumers alike were struggling to contend with tumultuous markets and a financial services industry under siege.

“Unlike the other downturns that I’ve been a part of, this one is faced with limited liquidity,” Mr Immelt, GE’s chief executive since 2001, told a conference.

“Once you break through ’74-’75, you don’t stop ’til you get to 1929.”

When asked whether he would call the current slowdown a recession or a depression, Mr Immelt joked that he would need to refer to his college economics text book for a precise answer but said “it is one of those” two.

He contended that governments were “firing as many bullets” as they could to stimulate economic growth and stabilise the credit markets.

Those measures, he said, should begin to take hold by early next year.

“Governments are all in,” he said. “And in my view, government always wins.”

GE has responded to the crisis with steps to shrink the finance arm, GE Capital, and its funding needs.

But unlike GE’s response to the early 1990s downturn, Mr Immelt said the company would not rebuild GE Capital through a spate of acquisitions of distressed assets.

Any likely acquisition targets would instead augment GE’s industrial businesses.

At the discussion, which was hosted by the Wall Street Journal, Boston Consulting Group and IESE Business School, Mr Immelt reiterated that he would not cut General Electric's stock dividend or veer away from a plan to run GE as a company with a triple-A credit grade. – ( Financial Timesservice)