GDP in the second quarter
US GDP fell 0.6 per cent year-on-year from April to June as a result of a sharp rise in consumer prices and a rise in the benchmark interest rate. The US Department of Commerce said in a statement released on Thursday.
It is worth noting that the authorities left unchanged the respective preliminary estimates published at the end of August.
Thus, they confirmed that the US economy is contracting for the second quarter in a row, which many experts call the definition of a recession in the country.
Most economists, citing the strong performance of the American labour market, consider that the US economy is not yet in recession. However, they fear that it could be on its way to one as the US Federal Reserve (Fed), which serves as the central bank, intends to keep raising interest rates to combat inflation.
The US economy has sent mixed signals this year. GDP fell by 1.6% in the first quarter. At the same time the number of jobs in the country increased by an average of 438,000 each month and the unemployment rate stood at a record low of 3.7%. There are currently around two jobs for every unemployed American.
Nevertheless, the Fed has raised interest rates five times this year most recently on September 21 to curb the rise in consumer prices, which rose 8.3% in August from a year earlier, despite a steep fall in fuel prices. Higher borrowing costs increase the risk of recession and rising unemployment.
As noted, the Commerce Department will release preliminary US GDP figures for July-September on 27 October. Economists expect the figure to return to growth in the third quarter at an annualised rate of 1.5%.