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 on Thursday.

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 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”.

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 remains one of the world’s largest and most-profitable companies, with operations in dozens of countries and an array of businesses that range from aircraft engines and medical-imaging equipment to cable television and lightbulbs. Yet the unfolding credit crisis has crimped profit at GE’s own financial services business, raising concerns for the company’s strategy and once-unquestioned financial strength.

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 GE’s stock dividend or veer away from a plan to run GE as a company with a triple A credit grade, even if ratings firms eventually opt to lower its debt.