The US economy has shrunk for the second quarter in a row, triggering one definition of a “technical recession,” according to data released by the Commerce Department on Thursday.
The nation’s gross domestic product fell at an annual rate of 0.9 percent in the second quarter after falling at an annual rate of 1.6 percent in the previous quarter.
While a second consecutive quarterly decline in GDP meets the standard definition of a “technical recession,” the National Bureau of Economic Research is the official arbiter of recessions in the US.
It defines such an event as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators.”
It does not sound like a recession to me, Biden says
The White House has pushed back against calling the current economy a recession. President Biden cited record job growth and foreign business investment as signs of strength in the economy.
“That doesn’t sound like a recession to me,” Biden said on Thursday.
“If you look at our job market, consumer spending, business investment—we see signs of economic progress,” Biden added, noting the historic post-pandemic gains the US experienced last year.
“There’s no doubt we expect growth to be slower than last year …. That’s consistent with a transition to stable, steady growth and lower inflation.”
Treasury Secretary Janet Yellen noted in a recent appearance on NBC’s Meet the Press that while two consecutive quarters of negative growth is generally considered a recession, conditions in the economy are unique.
“When you’re creating almost 400,000 jobs a month, that is not a recession,” she said.
Whether the US economy has entered a recession or not, most economists agree that the economy is slowing, prices are rising at their fastest pace in decades, and the housing market has started cooling as the Fed raises interest rates aggressively.
On Thursday, the central bank raised rates by an additional three-quarters of a percentage point.