Economic recessions are becoming more common in many nations, with the US economy shrinking for the second quarter in a row.
The United States, on the other hand, makes use of extra information in order to reach that conclusion.
However, the 0.9 percent drop in the three months ending in July has garnered significant attention as concerns about the economy continue to increase.
There hasn’t been this much inflation in food, fuel, and other necessities since 1981.
Many people are beginning to worry that the US economy is headed for a recession as the Federal Reserve aggressively boosts borrowing prices in an effort to calm things down and reduce pricing pressures.
Despite the public’s decreasing faith in the economy, US Vice President Joe Biden has sought to convince them otherwise by pointing out that the unemployment rate is still low (3.6%) and employment is high.
“If you look at our employment market, consumer spending, and corporate investment – we see evidence of economic growth,” Vice President Biden remarked on Thursday, emphasizing the record advances the United States saw last year after the epidemic. “In our estimation, growth will be smaller than it was last year…. There should be a gradual shift toward more stable and predictable growth and reduced inflation.”
He assured reporters this week, prior of the Commerce Department’s statistics, that the economy “was not going to be in a recession”. His Republican opponents accused the White House of attempting to redefine the phrase, which sparked a backlash.
In their words, “the Obama administration’s recession “rebrand” will not alleviate hardship for ordinary Americans.
An enormous jump in US interest rates to combat growing costs.
What is the US inflation rate, and why are prices rising?
The US GDP fell by 1.6 percent in the first quarter of the year. Economists at the time blamed the decrease in GDP on anomalies in trade statistics.
There was also a more significant slowdown in Thursday’s data as the property market, corporate investment and government expenditure all took a toll. Despite spending more on healthcare, lodging, and eating out, the annual rate of growth in consumer expenditure was only 1%.
Recession was officially declared by the National Bureau of Economic Research (NBER), where Harvard professor Jeffrey Frankel previously worked.
Job growth in the first quarter of the year was enough to convince him that the economy had not entered a recession yet. However, he lost his confidence after that.
Things have already slowed down, so I can’t claim everything is perfect right now, he said. A recession is more likely in the future than in a random year.
As of June, U.S. inflation was at 9.1 percent, the highest rate in more than 40 years.
A 0.75 percentage point hike in the US central bank’s benchmark interest rate was announced on Wednesday, the second since it began hiking rates in March.
The Federal Reserve hopes that by raising the cost of borrowing, consumers would spend less on things like houses and vehicles, which should help to alleviate some of the pressures driving up prices. However, a decrease in demand also has a negative impact on the economy.
Recently, consumer confidence has dropped, the housing market has slowed, and corporate activity has contracted for the first time since 2020, according to recent data.
It’s been a rough year for American businesses, with corporations like Facebook’s parent company Meta and General Motors announcing plans to reduce their workforces. A number of other businesses, notably those in the real estate industry, have made layoff announcements as well.
