United States GDP fell by 0.6% year-on-year in the second quarter of 2022, an upward revision of 0.3 percentage points compared with the July estimate. This follows data released by the US Department of Commerce on Thursday.
"GDP contracted at an annualised rate of 0.6% in the second quarter of 2022 after contracting by 1.6% in the first quarter. The figure for the second quarter was revised upward by 0.3 percentage points from the preliminary estimate that was released in July," the agency said. It is noted that the new estimate is based on a more comprehensive set of data than the July one.
"The new data primarily reflects an upward revision in consumer spending and private investment in inventories, with some downward revisions in housing investment as opposed to this," the Commerce Department explained.
However, many analysts consider the continuing economic downturn for two consecutive quarters to be one of the main signs of a recession. For his part, US President Joe Biden stated that the US economy has not slipped into recession. He cited the views of the US Federal Reserve (Fed) as well as economists and many prominent representatives of the banking industry.
In an effort to curb inflation, the Fed has raised the benchmark interest rate four times this year, gradually increasing its pitch. By raising borrowing rates, the central bank is making it more expensive to get a mortgage, car or business loan. The idea is that consumers and businesses will borrow and spend less, thereby helping to cool the economy and slow inflation.
In particular, rising borrowing costs have weakened the housing market. Sales of both new and existing homes fell sharply and the rate of housing construction fell in July to its lowest level since early last year. Similarly retail sales were flat last month, while inflation and higher borrowing rates are forcing many households to spend more cautiously.
Earlier, the US Department of Labor reported that the country's consumer prices rose 8.5% year-on-year in July. In order to fight inflation, the Fed raised its rate for the second time in a row in July by 0.75p to 2.25-2.5%.