GDP contracted at a revised 0.6% rate in the second quarter, indicating that the US remains in a technical recession.

The US economy It contracted at a slightly slower pace in the second quarter than previously reported, but continued to meet the criteria of a so-called technical slump as hyperinflation and rising interest rates weighed on spending.

In its second reading of the data on Thursday, the Commerce Department said gross domestic product, the broadest measure of goods and services produced across the economy, contracted 0.6% year-on-year in the second quarter. This is lower than the initially reported drop of 0.9%.

Gross domestic product actually contracted 1.6% in the January-March period, the worst performance since the spring of 2020, when the economy was in the midst of a coronavirus-induced recession.

Recessions are technically defined by two consecutive quarters of negative economic growth and are characterized by high unemployment, low or negative GDP growth, low incomes and slow retail sales, according to the National Bureau of Economic Research (NBER), which tracks downturns.

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With successive declines in growth, the economy meets Technical parameters of slack, which requires “a significant reduction in economic activity that is spread throughout the economy and lasts more than a few months.” However, the NBER – the semi-official verdict – may not confirm this immediately because it usually waits up to a year to be contacted.

The National Bureau of Economic Research also emphasized that it relies more on data than GDP in determining whether there was a recession, such as unemployment and consumer spending, which remained strong in the first six months of the year. It also takes into account the depth of any downturn in economic activity.

“Consequently, real GDP could decline by relatively small amounts in two consecutive quarters without a report of a peak,” the nonprofit said on its website.

The committee does not meet regularly, only when the members decide that it is justified.

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The recent decline stems from a number of factors, including declines in private inventories, residential and non-residential investment, and government spending at the federal, state and local levels. These declines were offset by an increase in net exports – the difference between what the United States exports and what it imports – as well as consumer spending, which accounts for two-thirds of GDP.

The report showed that consumers are spending much less than they did in the winter, with personal consumption expenditures rising just 1% for the period as high inflation continues and Americans’ purchasing power is eroded.

The report will exacerbate the political crisis for President Biden, who has seen his approval rating collapse in tandem with a faltering economy, and could complicate the Fed’s policy path as it weighs how quickly to raise interest rates in order to tame inflation without crushing it. Economic growth.

Central bank policymakers raised the benchmark interest rate by 75 basis points in June and July for the first time since 1994. They indicated that another increase of this size is possible in September, depending on upcoming economic data.

Federal Reserve Chairman Jerome Powell He told reporters last month that he did not think the US economy was in a recession.

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“I don’t think the United States is currently in a recession, and the reason is that there are too many areas of the economy that are doing very well,” Powell said. “This is the A very strong job market. … It doesn’t make sense for the economy to be in a recession with this kind of thing happening.

This is an evolving story. . Please check back for updates