The U.S. economy shrank for the second straight quarter from April to June. New data shows U.S. GDP fell 0.9%. According to Forbes, this signals “the start of a technical recession even as economists predict signs of a slowdown will only grow in the coming quarters, likely prompting the government to officially declare the economy has entered a recession.” The news caused gold to hold solid gains Thursday morning.
The Associated Press via ABC/Paul Wiseman
US economy shrank 0.9% last quarter, its 2nd straight drop
The U.S. 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.
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. Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession.
The report comes at a critical time. Consumers and businesses have been struggling under the weight of punishing inflation and higher borrowing costs. On Wednesday, the Federal Reserve raised its benchmark interest 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.
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Kitco News/Neils Christensen
Gold price holding solid gains as U.S. GDP drops 0.9% in Q2
It might not be an official recession just yet, but the U.S. economy contracted for the second consecutive quarter.
Thursday, Commerce Department said in its advanced reading that U.S. Gross Domestic Product fell 0.9% in the second quarter, missing market estimates for a 0.4% increase.
“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 report said.
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The Washington Post/Jeff Stein
The 8 economists who decide if the U.S. is in a recession
Democrats and Republicans have begun arguing over whether the U.S. economy is in a recession ahead of a key data release on Thursday. But the official pronouncement will ultimately come down to a little-known group of economists selected by the National Bureau of Economic Research called the “Business Cycle Dating Committee,” which stubbornly takes its time and tries to wall itself off from political interference or attempts to spin its findings.
The stakes for the group are high, in part because of the extraordinarily unusual economic conditions two years after the last recession, early in the coronavirus pandemic. The economy contracted in the first quarter of the year, and many Republicans say a recession is here already, with Thursday’s release expected by many analysts to show a second consecutive quarter of negative growth. But from President Biden down, administration officials are instead pointing to other indicators showing the economy remains strong and insisting the committee would be wrong to declare a recession.
You can read the full article, here.