The United States real gross domestic product (GDP) experienced a decline at an annual rate of 0.9% during the second quarter of 2022 (April-June), marking the second consecutive quarter of degrowth that meets the criteria for a technical recession.
The data from the US Bureau of Economic Analysis showed that the real GDP fell by 1.6% during the quarter that included January, February, and March.
It is common practice to define the beginning of a technical recession as the occurrence of two consecutive quarters of negative growth in the real GDP.
The most recent GDP estimate, which was released for the second quarter, is based on source data that are either not complete or are subject to additional revision by the source agency on August 25, 2022.
“The decrease in real GDP reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment,” the Bureau of Economic Analysis said in a statement.
“The decrease in real GDP was partly offset by increases in exports and personal consumption expenditures,” the statement continued.
Joe Biden, the Vice President of the United States, stated earlier this week that the country’s economy is not on the verge of entering a recession.
“In my view, the employment rate is still one of the lowest we have had in the history… and we still find ourselves find with people investing,” Biden said to the reporters. “We still find ourselves find with people investing.”
“My hope is that we go from this rapid growth to steady growth so that we will see some coming down,” added Vice President Joe Biden. “But I don’t think we are going to…god willing, I don’t think we are going to see a recession.”
Alongside slowing economic growth, the United States is also experiencing one of the highest rates of consumer inflation in more than four decades.
The Federal Open Market Committee of the United States raised its key policy interest rate earlier this week by 75 basis points to a range of 2.25-2.50 per cent in response to persistently high inflation. The committee did so with the expectation that the increase in interest rates will be “appropriate.”
Increasing interest rates usually has the effect of reducing demand in the economy, which in turn helps to slow down the rate of inflation. The Federal Reserve Board of Governors of the United States raised the interest rate by 75 basis points at their meeting in June, making it the most significant increase in rates since 1994.
Read more:-
- Doesn’t Sound Like a Recession’: Even though the Economy is Contracting 2, Vice President Biden is Optimistic.
- Another Decline in the Us Economy is Causing Recession Fears.
- The Markets Are Awaiting Us Economic Growth After Powell’s Less Hawkish Comments.
In June, the inflation rate in the United States came in at 9.1 per cent, marking the highest level seen since the early 1980s.
The United States Federal Reserve has recently adopted a more hawkish stance in response to inflation that is getting closer to reaching double digits.
In his opening remarks following the most recent monetary policy meeting, the Chair of the US Federal Reserve, Jerome Powell, stated that another “unusually large increase” in interest rates may be appropriate at their upcoming meeting; however, the decision regarding this matter will be contingent on the data that the US Fed receives between now and their upcoming meeting.
