Jack Welch, former General Electric chairman and chief executive officer, said the US economy is facing a deep downturn, and he supports a proposed $700 billion government rescue package for the financial sector.

“I now believe we are in for one hell of a deep downturn,” Mr Welch told the World Business Forum in New York today, adding that the first quarter of 2009 will likely be “brutal.”

Until recently, Mr Welch had believed the US economy could avoid recession, but he has changed his mind.

“I am now caving,” he said. “Get ready for real tough times. They’re coming. There is no credit available.”

Mr Welch said mortgage lenders, legislators, investment bankers and others are all to blame for the crisis, which stemmed from easy credit and investors’ appetite for yield.

“The problem was money didn’t cost anything,” Mr Welch said. “People took swings.”

He likened the crisis to Agatha Christie’s “Murder on the Orient Express,” in which all the suspects turn out to be guilty; but he singled out the role of investment banks in the crisis.

“We have to look at the damn investment bankers,” he said. “They’re playing with other people’s money. The only penalty was a cut in their bonus, not their head.”

Mr Welch praised the actions taken so far by Henry Paulson, the Treasury Secretary, Ben Bernanke, the Federal Reserve Chairman and Timothy Geithner, the New York Fed President, calling them “brilliant public servants” who have “not let ideology get in the way of taking action.”

“Thank God we have Bernanke, Paulson and Geithner,” Mr Welch said. “We have to act.”

He said the US economy would eventually recover, but this recovery would likely be gradual rather than V-shaped.

The 72-year-old Welch served as chairman and chief executive of GE from 1981 to 2001 and currently runs an advisory firm for business leaders.

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