US economy shrinks in second quarter, signaling unofficial start of recession
The US economy shrank again in the last three months, unofficially signaling the start of a recession.
The commerce department announced Thursday that gross domestic product (GDP) – a broad measure of the price of goods and services – decreased at an annual rate of 0.9% in the second quarter after falling at an annual rate of 1.6% in the first three months.
The bad news will be a major blow for the Biden administration as it prepares for a tough midterm election season. White House officials have tried to tamp down talk of a recession, arguing that many parts of the economy remain strong.
The growth rate stands in marked contrast to the robust 6.9% annual increase in GDP recorded in the final quarter of 2021 when the economy roared back from Covid shutdowns.
Two quarters of negative GDP growth are widely regarded as a signal that the economy has gone into recession. But the National Bureau of Economic Research (NBER) is the official arbiter of when recessions begin and end. While the GDP figures will play into the NBER’s final verdict, it also looks at a wider range of economic factors, including the jobs market, and is unlikely to give its decision soon.
In the meantime, pressure remains on the Biden administration. Surveys of consumer confidence are falling as recession fears grow and Joe Biden’s overall and economic approval poll numbers are currently at the lowest levels of his presidency.
The latest GDP figures came a day after the Federal Reserve announced another three-quarter of a percentage point increase in its benchmark interest rates as it fights to tame inflation.
Prices rose at an annual rate of 9.1% in the year to June, driven up by soaring costs for fuel, food and shelter.
While parts of the US economy remain
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