The U.S. economy contracted for a second consecutive quarter between April and June,
meeting the technical definition of a recession.
Data released by the U.S. Bureau of Economic Analysis showed that gross domestic product
(GDP) in the U.S. fell at an annualized rate of 0.9% in this year’s second quarter. That follows a
1.6% decline in the first quarter.
A recession is defined in economic terms as two consecutive quarters of negative economic
growth. However, it is the National Bureau of Economic Research that declares recessions and
expansions, and that organization has not yet officially declared that the U.S. is in a recession.
Regardless, the second quarter GDP result was worse than the average estimate of
economists, who were calling for a 0.3% gain during the period.
The decline in Q2 GDP resulted from lower inventories, residential and non-residential
investment, and government spending at the federal, state and municipal levels. Private U.S.
investment in the quarter declined 13%.
Consumer spending in the second quarter increased just 1% as inflation continued to rise.
Spending on services accelerated during the second quarter by 4.1% but was offset by a
decline in non-durable goods of 5.5%.
After posting its strongest gain since 1984 last year, the U.S. economy has slowed considerably
this year due to inflation that is at its highest level since 1981 and rising interest rates aimed at
lowering elevated consumer prices.
Additionally, supply chain issues continue to cause problems for the U.S. economy. Growing
trade imbalances and a slowdown in inventories are also slowing GDP growth south of the
border.
The economic decline is becoming a political issue in America as voters prepare to head to the
polls for mid-term Congressional elections this fall. A recent poll by Morning Consult/Politico
found that 65% of registered voters think the U.S. economy is now in a recession.
