John McCain continued to shape his own strain of populism Wednesday, saying the nation is in a recession during a visit to rural Kentucky and prescribing a mix of government programs and government restraint to reverse course.

"We are in a recession. The numbers indicate that," McCain said in Inez, Ky., repeating the statement he made a week ago in defiance of the Bush administration's own economic assessment.

"American families are hurting. ... Let's start out with the acceptance that action has to be taken. We need to do a lot of things," he said.

McCain's visit to Inez, a town of 700, was designed to rally support from low-income blue-collar voters.

McCain's campaign touted it as a "forgotten" city -- indeed, it was the first visit to Martin County by a president or presidential candidate since 1964, when President Lyndon Johnson stopped in Inez to declare war on poverty.

Three generations later, according to the U.S. Census data, more than 40 percent of the county's residents are below the poverty line.

"I have no doubt President Johnson was serious and had the very best of intentions when he declared the war on poverty in America," McCain said at a town hall meeting. "But the army he enlisted was mostly drawn from the ranks of government bureaucracies.

"Government has a role to play in helping people who through no fault of their own are having a hard time. But government can't create good and lasting jobs outside of government. It can't pay lost wages. It can't dig coal from the earth. It can't buy you a house or send all your kids to college. It can't do your work for you."

McCain proposed new federal and state programs to help recruit teachers and provide high-speed Internet access to "underserved" communities like Inez, while railing against what he called wasteful government spending.

The proposals added to McCain's other recent economic proposals, like a summer "gas tax holiday" and a multi-billion dollar government package to give aid to struggling homeowners.

McCain has taken heat from his potential Democratic rivals for taking too long to pitch pro-active measures to fight the economic downturn.

FOX News' James Rosen contributed to this report.