The United States confirms that its economy entered a recession in the second quarter

The United States confirms that its economy entered a recession in the second quarter

The US government confirmed on Thursday that the country’s economy fell 0.1% in the second quarter of the year, which means that it entered a recession, as this was the second consecutive quarter of contraction.

This is indicated by the third and final official account of the country’s economic development published by the Bureau of Labor Statistics, confirming advanced data and reflecting an annual decline of 0.6 percent.

The Census Bureau pointed to the context of high inflation and raising interest rates to address it, which coincides with other challenges such as problems in the supply chain, although on a positive note it highlighted the low unemployment rate. But he cautioned that the effects of all these factors cannot be calculated separately when making an economic estimate.

According to these statistics, the decline in the second quarter mainly reflects the decline on the investment side – private and residential – and on the side of public spending, whether at the federal, state or local level. The declines were partially offset by increased exports and consumer spending. Imports also rose, which negatively affects the gross domestic product account.

The third account did not differ from the second because, in spite of the fact that either exports or investment were adjusted downward, on the contrary, household consumption and public expenditure were adjusted upward.

A two-quarter drop in GDP underscores the technical stagnation of the world’s leading economy, despite the Democratic-led government Joe Biden It has been insisted at all times that the US is not in a recession scenario.

However, the risks remain at a time of great uncertainty such as today, which is characterized by high inflation and the effects of Ukrainian war.

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The United States has been trying for months to contain prices and Federal Reserve Last week, it approved the fifth consecutive increase in interest rates, which are already in the range of 3 to 3.25%, the highest level in the last 14 years.

Federal Reserve Chairman, Jerome PowellLast week, after the announcement of a new interest rate hike of 0.75 points, it was recognized that this more restrictive monetary policy would slow the economy.

Powell acknowledged that the Fed knows that raising interest rates is likely to cause a โ€œperiod of below-trend economic growth,โ€ and that conditions in the labor market, very strong since the post-pandemic recovery began, are sure to get worse.

Experts believe that the effects of higher prices will take a few months to show up in the economy as a whole, and they have no doubt that it will have negative effects on the real estate market or the demand for durable goods.

modified Inflation in the United States It’s falling though still very high, at 8.3% in August.

Unemployment remains very low, although last month it broke its downward streak in the United States when the rate rose by twenty to 3.7 percent.

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