The government’s first of three estimates of GDP for the April-June quarter marked a drastic weakening from the 5.7% growth the economy achieved last year. “Both Chairman Powell and many of the significant banking personnel and economists say we’re not in recession,” the president said. Speaking from the White House, Biden leaned on remarks that Powell and other economic leaders have made. economy is still growing despite two consecutive quarterly declines in GDP. The administration has stressed that solid job growth and low unemployment show that the U.S. In the wake of Thursday’s government report, Biden dismissed any notion that the data depicted an economy in recession. Among other things, the measure would allow Medicare to negotiate prescription drug prices with pharmaceutical companies, and the new revenue would be used to lower costs for seniors on medications. In the meantime, Congress may be moving toward approving action to fight inflation under an agreement announced Wednesday by Senate Majority Leader Chuck Schumer and Sen. Still, Guatieri said, “the economy has quickly lost steam in the face of four-decade high inflation, rapidly rising borrowing costs and a general tightening in financial conditions.” “The fact that the economy created 2.7 million payrolls in the first half of the year would seem to argue against an official recession call for now." is in, or soon headed for, a recession," said Sal Guatieri, senior economist at BMO Capital Markets. “The back-to-back contraction of GDP will feed the debate about whether the U.S. Many of them point, in particular, to a still-robust labor market, with 11 million job openings and an uncommonly low 3.6% unemployment rate, to suggest that a recession, if one does occur, isn't here yet. And with the November midterm elections nearing, Americans’ discontent has diminished President Joe Biden’s public approval ratings and could increase the likelihood that the Democrats will lose control of the House and Senate.įed Chair Jerome Powell and many economists have said that while the economy is showing some weakening, they doubt it’s in recession. In the United States, the inflation surge and fear of a recession have eroded consumer confidence and stirred anxiety about the economy, which is sending frustratingly mixed signals. Europe, highly dependent on Russian natural gas, appears especially vulnerable to a recession. The Fed is hoping to achieve a notoriously difficult “soft landing”: An economic slowdown that manages to rein in rocketing prices without triggering a recession.Īpart from the United States, the global economy as a whole is also grappling with high inflation and weakening growth, especially after Russia's invasion of Ukraine sent energy and food prices soaring. On Wednesday, the Fed raised its benchmark rate by a sizable three-quarters of a point for a second straight time in its push to conquer the worst inflation outbreak in four decades.
Consumers and businesses have been struggling under the weight of punishing inflation and higher loan costs.
#HAPPY SUMMER WALKTHROUGH 3.6 SERIES#
Higher borrowing rates, a consequence of the Federal Reserve's series of rate hikes, clobbered home construction, which shrank at a 14% annual rate. Inventories tumbled as businesses slowed their restocking of shelves, shaving 2 percentage points from GDP. Consumer spending slowed as Americans bought fewer goods. The GDP report for last quarter pointed to weakness across the economy. Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession.
The decline that the Commerce Department reported Thursday in the gross domestic product - the broadest gauge of the economy - followed a 1.6% annual drop from January through March.
economy shrank from April through June for a second straight quarter, contracting at a 0.9% annual pace and raising fears that the nation may be approaching a recession.
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