The US economy contracted for the second consecutive quarter. thus entering what is called a technical recession. Photo: AFP
The US economy is contracted by 0.2% in the second quarterand of the year and thus concatenates two quarters of decline in gross domestic product (GDP), following the global crisis resulting from the war in Ukraine and galloping inflation.
So far in 2022, the The US economy shrank 0.9%.
These data mean that the world’s first economy it would enter a technical recessionsince an economy is traditionally believed to have entered recession when it chains two consecutive quarters of decline in GDP, a diagnosis that, however, the US government does not agree with.
Joe Biden’s popularity is in line with the economy. Photo: EFE
The report comes at a critical time. consumers and businesses they are fighting inflation and the rising cost of borrowing.
On Wednesday, the Federal Reserve raised its benchmark interest rate by three-quarters of a point for the second consecutive time in an effort to beat the worst inflation surge in four decades.
The Fed hopes to get a “soft landing” notoriously difficult: an economic slowdown that manages to curb skyrocketing prices without triggering a recession.
Fed Chairman Jerome Powell and many economists have said that while the economy is showing some weakness, they doubt it is in a recession.
The detail of the variation of the economy in the United States, Photo: AFP
Many of them point out, in particular, that the labor market remains robust, with 11 million jobs open and an unusually low unemployment rate of 3.6%, for suggest that a recession, if it occurs, is still a long way off.
An economy of ups and downs
The first of three government estimates for GDP in the April-June quarter on Thursday marks a sharp weakening from the 5.7% growth the economy achieved last year.
It was there fastest expansion in a calendar year since 1984reflecting the vigor with which the economy has recovered from the short but brutal 2020 pandemic recession.
But since then, the combination of rising prices and rising borrowing costs has taken its toll. The Labor Department’s Consumer Price Index rose 9.1% in June from the previous year, a pace not matched since 1981.
And despite widespread wage increases, prices are rising faster than wages. In June, median hourly wages, when adjusted for inflation, fell by 3.6% from the previous year, which represents the fifteenth year-over-year decline.
Rising inflation and fears of a recession have eroded consumer confidence and raised public anxiety about the economy, which is sending out frustrating and mixed signals.
And with November’s midterm elections approaching, American discontent has arrived Decreased ratings of President Joe Biden’s public approval and the likelihood of Democrats losing control of the House and Senate has increased.
Source: EFE and AP
Source: Clarin