GDP in the US decreased by 0.9% in Q2, marking the second consecutive decline and a clear indication of a recession

August 1, 2022

According to a study released by the Bureau of Economic Analysis, the U.S. economy shrank for the second consecutive quarter from April to June, exceeding the generally acknowledged threshold for a recession.

The advance estimate for the period shows a 0.9 percent annualized decline in gross domestic product. That was worse than the Dow Jones projection for a rise of 0.3 percent and follows a fall of 1.6 percent in the first quarter.

Officially, the National Bureau of Economic Research declares recessions and expansions, and it will probably be months, if not longer, before it makes a determination about the time period in question.

But regardless of the peculiar circumstances behind the decrease and regardless of what the NBER decides, a second consecutive negative GDP measurement fits a long-held fundamental concept of recession. The GDP, which includes the total volume of goods and services generated over the time period, is the economy’s broadest indicator.

Stocks opened marginally lower as a result of the news, but markets hardly responded. The majority of government bond yields decreased, with the steepest declines occurring at the shorter end of the curve.

According to a different report released on Thursday, layoffs are nevertheless common. According to the Labor Department, initial jobless claims reached 256,000 for the week ending July 23, a decrease of 5,000 from the upwardly revised number of the prior week but higher than the Dow Jones estimate of 249,000.

A wide range of factors, including as declines in inventories, residential and nonresidential investment, and government spending at the federal, state, and municipal levels, contributed to the GDP reduction. Gross domestic private investment fell 13.5% during the previous three months.

Personal consumption expenditures, a measure of consumer spending, rose merely 1% during the period as inflation picked up. Spending on services increased throughout the time by 4.1 percent, although this was countered by declines in both nondurable and durable products of 5.5 and 2.6 percent, respectively.

Source: CNBC
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