The U.S. economy contracted for a second straight quarter, sounding the alarm about a possible recession as the country grapples with runaway inflation and rising interest rates.
Top economists don’t believe a slowdown has begun, but some predict a mild recession is likely early next year.
Residential investment fell sharply in the last quarter as the housing market slumped, while storage and business investment also fell, more than offsetting a slight increase in consumer spending.
The country’s gross domestic product, the value of all goods and services produced in the United States, fell at a seasonally-adjusted annual rate of 0.9% during the April-June period, the department said Thursday. Trade. This followed a 1.6% drop earlier this year. Economists polled by Bloomberg were expecting a 0.5% rise in GDP.
The second straight quarterly drop in output hits an informal recessionary threshold, but not the criteria relied on by the National Bureau of Economic Research. The nonprofit group defines a recession as a significant drop in a wide range of economic activity, including employment, retail sales and industrial production.
Employers added a solid 372,000 jobs in June and an average of 457,000 a month so far this year, making it unlikely a downturn is already underway, economists say.
Yet there is no doubt that the nation is entering a perilous period. Inflation hit a 40-year high of 9.1% in June and the Federal Reserve is trying to combat soaring prices by aggressively raising interest rates in a campaign that could trigger a recession.
Goldman Sachs predicts a 30% chance of a slowdown over the next year, while Wells Fargo predicts a mild recession in early 2023.