The U.S. economy shrank again in the second quarter amid aggressive monetary policy tightening by the Federal Reserve to combat the highest inflation in 40 years, defying analysts’ estimates of little recovery in GDP after a first-quarter slump.
In particular, the GDP contracted at an annual rate of 0.9% in the previous quarter, according to the first estimate of the US Department of Commerce. It is noted that the average estimates of analysts in a Reuters poll called for a 0.5% increase in GDP.
The US economy shrank 1.6% in the first quarter. Two consecutive quarters of GDP contraction mark the entry of the economy into a technical recession. However, the U.S. Bureau of Economic Research, the agency responsible for periods of contraction in the U.S. economy, defines a recession as “a significant decline in economic activity, covering the entire economy, lasting more than a few months, usually visible in output , employment, real income and other indicators”.
Federal Reserve Governor Jerome Powell, speaking shortly after the monetary policy decisions of the bank on Wednesday, he estimated that the US economy is not in recession, despite the slowdown in recent months.
“We are seeing a weakening or some slowdown in the economy, but there is very strong evidence from the labor market. Demand is still strong and the economy is expected to continue to grow, despite the slowdown in the second quarter. A soft landing for the economy is our goal. , it’s a challenge, but that’s what we’re after,” he said.
Source: Capital
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