US economy shrinks for second straight quarter, furthers recession fears

Washington [US], July 28 (ANI): Real gross domestic product (GDP) in the US decreased at an annual rate of 0.9 per cent in the second quarter of 2022 (April-June), marking the second consecutive quarter of degrowth which qualifies for a technical recession.
In the January-March quarter, real GDP decreased 1.6 per cent, US Bureau of Economic Analysis data showed.
A technical recession is often defined in which there have been two consecutive quarters of negative growth in the real GDP.
The latest GDP estimate released for Q2 is based on source data that are incomplete or subject to further revision by the source agency on August 25, 2022.
"The decrease in real GDP reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by increases in exports and personal consumption expenditures," the Bureau of Economic Analysis said in a statement.
Earlier this week, US President Joe Biden said the country's economy is not heading into a recession.
"In my view, the employment rate is still one of the lowest we have had in the history... and we still find ourselves find with people investing," Biden told reporters.
"My hope is we go from this rapid growth to steady growth so we will see some coming down, but I don't think we are going to...god willing I don't think we are going to see a recession," Biden added.
Apart from degrowth, the US is also witnessing an over four-decade high consumer inflation.
In the backdrop of high inflation, the US Federal Open Market Committee earlier this week raised its key policy interest rate by 75 basis points to 2.25-2.50 per cent, anticipating that the increase in the interest rates will be "appropriate".
Hiking interest rates typically cool demand in the economy, thereby putting a brake on the inflation rate. The US Federal Reserve in its June meeting too raised the interest rate by 75 basis points, which was the steepest hike since 1994.
The inflation rate in the US came in at 9.1 per cent in June, the highest since the early 1980s. Inflation approaching double-digits has prompted the US central bank to take a tougher stance.
US Federal Reserve Chair Jerome Powell in his opening remarks after the recent monetary policy meeting said that another "unusually large increase" in rates could be appropriate at their next meeting, that is a decision that will depend on the data the US Fed gets between now and then. (ANI)