From Apr to June Annual Rate of US economy downfall by 0.6 %

Washington: The government reported Thursday that the U.S. economy declined at a 0.6% annual rate from April through June, which is unchanged from its previous second-quarter estimate and hampered by rising consumer prices and interest rates.

It was the second straight quarter of economic contraction, which is one unofficial indicator of a recession.

The majority of analysts think the largest economy in the world is still not in a recession because of the robust and stable American labour market.

But when the Federal Reserve raises interest rates to fight inflation, they are concerned that it might be headed for one.

2% yearly growth in consumer expenditure was countered by declines in company inventories and housing investment.

The American economy has been giving off conflicting signals this year. In the first half of 2022, the gross domestic product, or GDP, decreased. However, there is still a solid job market.

Currently, every American who is unemployed has access to around two jobs.

To control consumer prices, which rose 8.3% in August from a year earlier despite falling fuel costs, the Fed has increased interest rates five times this year, most recently on September 21.

The likelihood of a recession and higher unemployment is increased by rising borrowing costs.

Last week, Fed Chair Jerome Powell stated, “We have to put inflation behind us.” I wish doing it could be done without suffering. Not at all.

President Joe Biden’s Democrats face challenges as they attempt to keep control of Congress in the next midterm elections, including the possibility of a recession and continuously and excruciatingly high pricing.

However, decreases in gasoline costs over the past two months have lifted consumer confidence.

The third and final assessment of second-quarter growth by the Commerce Department was released on Thursday.

The economy’s July–September performance will be examined for the first time on October 27.

According to a study by the data firm FactSet, economists anticipate that the third quarter GDP will grow again, albeit slowly, at a rate of 1.5% annually.

The Department of Commerce also disclosed updated GDP figures on Thursday.

The update revealed that the economy did slightly better than anticipated in 2020 and 2021.

The GDP increased by 5.9% last year, up from the previously reported 5.7%, then after being battered by the coronavirus pandemic, it declined by 2.8% in 2020, which was not as bad as the 3.4% previously recorded.

GDP was the same in 2018 (2.9%) and 2019 (2.3%). The growth estimate for 2017 was revised downward, from 2.3% to 2.2%.

Leave a Comment