UPDATE 1-US recession possible, label unimportant -Treasury

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WASHINGTON, April 4 (Reuters) - A senior U.S. Treasury official said on Friday he agrees with Federal Reserve Chairman Ben Bernanke that a U.S. economic recession was a possibility, but the description of the slowdown was less important than dealing with its practical effects.

Philip Swagel, the Treasury's assistant secretary for economic policy, declined in a news briefing to declare that the economy was in a recession after the Labor Department said U.S. employers cut payrolls in March by 80,000. The data marked the biggest monthly job decline in five years and the third month in a row that payrolls shrank.

"We know it's a slowdown," Swagel said, adding that he agrees with analysts who have said that the label doesn't matter.

"Regardless of where precisely GDP (gross domestic product) growth is, we know we're going to be growing considerably less than potential and that is going to show up in all of these things that are important to Americans," such as the job market, and incomes and consumer spending, he said.

He said job losses, flat personal income and lower durable goods orders in recent months all helped to motivate the Bush administration to work with Congress to quickly pass an economic stimulus package that will deliver tax rebate checks of about $1,200 per married couple starting in May.

Despite the recent decline in payrolls, the stimulus will add around 500,000 to 600,000 jobs to the economy by the year end, Swagel said. The areas where these jobs are most likely to be added will be services, such as health care, which were the fastest growing sectors late last year.

He noted that there were still some bright spots in the U.S. economy, including healthy exports and core inflation that is "still contained" despite recent sharp increases in food and energy costs.

"Whether GDP is X or Y matters to me a lot as an economist because it tells me about what's going on in the broad picture, but I well understand that what matters ultimately is ... what happens to families -- jobs, incomes, spending," Swagel said. (Reporting by David Lawder; Editing by Tom Hals)