GDP report shows US economy shrank again in second quarter

The US Gross Domestic Product (GDP) dropped by 0.2% in the second quarter, after a 0.4% decline in the first, fueling fears that a recession may have already begun, the Bureau of Economic Analysis reported.

This is GDP´s second-quarter slowdown, which it is considered as a technical recession, according to economists, due to the financial scenario by chaining two economic slowdown quarters.

The US economy shrank as a result of the global crisis stemming from inflation, supply chain problems, declining private investment and rising interest rates, the Commerce Department said.

However, President Joe Biden´s economic advisor Jared Bernstein disagreed with this information since he asserted the GDP´s slowdown was slight in April-May-June period.

The United States´ GDP slowdown data was known following the Federal Reserve´s decision to raise the official interest rate by 0.75% for the second month in a row, without ruling out the possibility of another increase in September.

In June, the US inflation rate was 9.1%, something not seen since 1981. Figures from the Commerce Department showed that inflation forced Americans´ purchasing power to down, while Fed’s tightening of monetary policy weakened sectors sensitive to such movements, such as housing.

Prensa Latina

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