U.S. economy shrank 0.2% in the June quarter, 0.9% on an annualized basis.
QUICK FACTS:
- The U.S. economy shrank for a second quarter in a row this year, according to data released Wednesday, signaling the start of what’s being called a “technical recession.”
- The country’s GDP (gross domestic product) fell by 0.9% on an annualized basis in the second quarter, or a 0.2% dip from the previous quarter, the commerce department announced Thursday.
- Both stock market futures and the two-year Treasury yield fell.
- A technical recession is defined as two consecutive quarters of GDP contraction, but the National Bureau of Economic Research (NBER) dictates when recessions begin and end. While the GDP does influence the NBER’s final say, it also looks at other economic factors, such as the jobs market.
- The economic downturn will be a major blow for the Biden administration, as White House officials have tried to tamp down talk of a recession. The Biden admin continues to blame the economic decline not on their own policy failures but on home buyers (that they aren’t buying enough), the federal government not spending enough, and business inventories.
- Wells Fargo senior economist Tim Quinlan called the economic downturn “a harbinger of worse to come.” “We expect the loud wailing of an actual recession to begin early next year,” he added.
WHAT JOE BIDEN SAID:
Joe Biden had said in a statement that it was “no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation. But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure.”
BACKGROUND:
- News that the U.S. has entered a recession follows first-quarter GDP data showing the U.S. economy shrank by 1.6%.
- It also comes the day after the Federal Reserve raised interest rates by .75% as part of an aggressive campaign to rein in inflation.
- Personal consumption, which signifies the health of the U.S. consumer, grew by 1% in the second quarter, a slowdown compared to 1.8% in the first quarter.
