A key measure of economic output fell in the second quarter, raising fears that the U.S. may be entering a recession — or perhaps it has already begun.
Gross domestic product, adjusted for inflation, fell 0.2 percent in the second quarter, equivalent to an annual rate of decline of 0.9 percent, the Commerce Department said Thursday.
The 0.2 percent decline followed a 0.4 percent contraction in the first three months of the year — a common but unofficial definition that means the U.S. economy has entered a recession two years after it last emerged.
Most economists think the economy has not met the formal definition of recession, which is based on a broad set of indicators, including levels of income, spending and employment. The GDP data will also be revised several times in the coming months.
However, data released on Thursday left little doubt that the recovery is losing momentum amid high inflation and rising interest rates. Business investment and construction activity both fell in the second quarter after rising in the first quarter. Consumer spending in line with inflation remained positive, albeit at a slower pace.
“We don’t think we’re in a recession yet,” said Aditya Bhave, senior economist at Bank of America. “But the big thing here is that the underlying trend of domestic demand is weakening. You see a clear decline from the first quarter.
A decline, on its own, is not necessarily bad news. The Federal Reserve is trying to cool the economy in an attempt to control inflation The White House argued The recession is part of an inevitable and necessary transition to a period of steady growth after last year’s rapid recovery.
But forecasters in recent weeks have been more concerned about aggressive moves by the central bank — including. Increases the interest rate by three-quarters of a percent For the second month, Mercury will be sluggish. There are signs that layoffs are on the rise and consumers are struggling to keep up with rapidly rising prices.
said Tim Quinlan, senior economist at Wells Fargo.
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