The U.S. economy shrank from April through June for a second straight quarter, contracting at a 0.9% annual pace and raising fears that the nation may be approaching a recession.
In the United States, the inflation surge and fear of a recession have eroded consumer confidence and stirred anxiety about the economy, which is sending frustratingly mixed signals.
Fed Chair Jerome Powell and many economists have said that while the economy is showing some weakening, they doubt it’s in recession.
Many of them point, in particular, to a still-robust labor market, with 11 million job openings and an uncommonly low 3.6% unemployment rate, to suggest that a recession, if one does occur, isn’t here yet.
The government’s first of three estimates of GDP for the April-June quarter marked a drastic weakening from the 5.7% growth the economy achieved last year.
Thursday’s report showed that consumer spending rose at a 1% annual pace from April through June, down from 1.8% in the first quarter and 2.5% in the final three months of 2021.
Before accounting for surging prices, the economy actually grew at a 7.8% annual pace in the April-June quarter.
Even with the economy recording a second straight quarter of negative GDP, many economists do not regard it as constituting a recession.
The definition of recession that is most widely accepted is the one determined by the National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
“If we aren’t yet in a recession, we soon will be,″ said Joshua Shapiro, chief U.S. economist for the economic consulting firm Maria Fiorini Ramirez Inc. “An economy rapidly losing momentum combined with aggressive monetary tightening is not a recipe for a soft landing or any other type of happy ending.
Posted in: Business + Economics