WASHINGTON (Bloomberg) - The worst US recession since the 1930s may already be over, according to Edward McKelvey, a senior economist at Goldman Sachs Group Inc. in New York.

The gain in industrial production in July, the first in nine months, and the likelihood that output will continue to grow because of depleted inventories is "the best" signal that the contraction is over, Mr. McKelvey wrote in an e-mail to clients yesterday.

The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), the Cambridge, Massachusetts-based private research group charged with calling turns in the economy, determined the current downturn started in December 2007. A June trough means the contraction would have lasted 18 months, making it the longest since the Great Depression.

"The upturn in industrial production reported for July suggests that June could wind up being the NBER cycle low," Mr. McKelvey wrote. The projection was "highly tentative" and "a lot has to happen before we can state this conclusion with conviction," he said.

A gain in gross domestic product this quarter and sustained increases in total sales adjusted for inflation, together with further increases in production, would help cement the verdict, Mr. McKelvey said.

The NBER committee defines a recession as a "significant" decrease in economic activity over a sustained period of time. The decline would be visible in GDP, payrolls, industrial production, sales and incomes.

The government's cash-for-clunkers programme is among the reasons production, GDP and sales are all likely to increase this quarter, Mr. McKelvey said.

General Motors Co. (GM) announced yesterday it called back 1,350 union workers, its biggest one-time increase in jobs since 2006, as it boosts second-half production. GM will add shifts at plants in the Canadian province of Ontario and in Lordstown, Ohio. The production changes add about 60,000 units to GM's fourth-quarter plans, Mark LaNeve, the vice president overseeing US sales, said in a conference call.

The job market, which is likely to deteriorate further, is the one component that may not confirm the contraction is over, Mr. McKelvey said.

For that reason, McKelvey said the task of predicting when recessions begin and end is "counterproductive" since most Americans will continue to feel glum as the jobless rate climbs and payrolls fall.

Calling the end of the downturn comes "with considerable misunderstanding - bordering on distrust and disdain - from those who are experiencing recession by their own definition at first hand", he said.

"This is not to say that identifying recessions is pointless, but merely to suggest that a more natural criterion" for determining the length of contractions would be "a period during which unemployment rises significantly", Mr. McKelvey said.