US economy shrinks for second consecutive quarter, fueling recession fears OLASMEDIA TV NEWSThis is what we have for you today:
The US economy contracted for the second quarter in a row from April to June, contracting at an annual rate of 0.9%, raising fears that the country is approaching a recession.
The decline reported by the Commerce Department on Thursday, July 28, in gross domestic product, the economy’s broadest measure, followed an annual decline of 1.6% from January to March. Consecutive quarters of declining GDP provide an informal, but not definitive, indicator of a recession.
The report comes at a critical time as the country’s consumers and businesses struggle under the weight of punitive inflation and higher borrowing costs.
The report comes just a day after the US Federal Reserve raised its benchmark rate by 0.75 percent for the second time in a row, as it continues its efforts to contain the worst inflation hike in four decades.
The Fed hopes to achieve a notoriously difficult “soft landing”: an economic slowdown that manages to contain skyrocketing prices without triggering a recession.
The strength of the US job market, Federal Reserve Chairman Jerome Powell said at a news conference on Wednesday, “makes you doubt the GDP data.”
When asked if he thought the US was in recession, Mr Powell said he didn’t, citing the “remarkably strong” labor market and adding “it doesn’t make sense” that the country is now in recession. is in.
Mr Powell also rightly noted that US GDP data is often revised at a later date. In its Thursday morning press release, the BEA noted that the GDP estimate was based on source data that is either incomplete or subject to revision by the source agency and that the second estimate for the quarter will be released on August 25.
The most widely accepted definition of a recession comes from the National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines it as “a significant drop in economic activity that spreads across the economy and lasts longer than a few months.” .
In a statement from the White House, President Joe Biden said, “It’s no surprise that the economy is slowing as the Federal Reserve tries to cut inflation. But even as we face historic global challenges, we are on the right track and will come through this transition stronger and safer. Our labor market remains historically strong, with unemployment at 3.6 percent and more than 1 million jobs in the second quarter alone. Consumer spending continues to grow.”
Prior to the release of today’s data, forecasters, polled by data firm FactSet, had estimated that the country’s GDP made a lukewarm annual gain of 0.8 percent between early April and late June. Others believed that a 0.2 percent anemia was possible.
The Federal Reserve Bank of Atlanta’s running estimate of GDP growth, based on available economic data, indicated a 1.2 percent decline in the second quarter was imminent.