The U.S. economy has plunged into a technological recession as U.S. gross domestic product (GDP) growth has declined for the second quarter in a row. A series of negative GDP growth has put more pressure on the US central bank (Fed) to raise interest rates.
According to the U.S. Bureau of Economic Analysis, U.S. GDP growth in the second quarter of this year fell 0.9% on an annualized basis compared to the previous quarter. In the first quarter of last year, it was -1.6%. Negative growth for two consecutive quarters is considered the most important indicator that the National Bureau of Economic Research (NBER) considers when defining an economic recession. According to the Financial Times, “the increase in inventories by companies has had a negative impact on GDP growth.”
This announcement is contrary to the recent mood of positive indicators. The U.S. Department of Commerce announced on the 27th that last month, orders for durable goods from the U.S. increased 1.9% from the previous month to $272.6 billion (regarding 356 trillion won).
According to CNBC, economists had predicted an average growth rate of 0% for GDP in the second quarter. Prior to the announcement, Archyde.com had estimated a 0.5% increase in economists surveyed.
The Joe Biden administration and the US Fed are of the view that even if GDP declines for the second consecutive quarter, it cannot be viewed as a recession. The labor market conditions are good. The U.S. unemployment rate stood at 3.6% for the fourth straight month from March to June, near full employment.
The New York Times also explained on the 28th that “a significant number of economists believe that the official definition of a recession has not yet been met, given comprehensive indicators such as income, expenditure and employment.”
Reporter Lee Joo-hyun [email protected]
