The warning of the economists of a possible fall in technical recession in USA It was confirmed this Thursday with the publication of the Gross Domestic Product (GDP) data, which fell by 0.2% in the second quarter in a context of runaway inflation and a global crisis derived from the war in Ukraine.
The GDP of the world’s leading economy thus chains two quarters of falls, as confirmed by data published by the Bureau of Labor Statistics (BEA), which is traditionally considered a technical recession. A diagnosis that, however, is not shared by the US government, which does not believe that the country is in a recession scenario given the robustness of its economy.
As soon as the data was known, the president himself, Joe Biden, sent a statement in which he assures that despite the “historic global challenges” facing the country, is “In the correct way” and will come out “of this transition stronger and safer”.
“Coming off the historic economic growth of last year and recovering all the private sector jobs lost during the pandemic crisis, it is not surprising that the economy is slowing as the Federal Reserve acts to reduce inflation,” said the president, who highlighted the strong labor market, with an unemployment rate of 3.6%and he didn’t mention the dreaded word recession.
The US GDP chains two quarters of falls
In statements to Eph this Thursday, Alexandra Castilloundersecretary for Commerce and Economic Development at the Department of Commerce, insisted that “markets are healthy” and that the real economy is in good health with strong job creation. The data for the second quarter of 2022, the first of the three estimates made by the US Executive, comes after the economy contracted 0.4% in the first quarter.
According to the report published this Thursday by the BEA, which calculates an annual rate of decline of 0.9%, one of the factors behind this decline is high inflation, which in the second quarter increased 8.2%, after growing 8% in the first quarter. Excluding food and energy, prices increased by 6.6%says the BEA.
Another reason he offered for the drop in GDP is the disruption of the global supply chain, strongly affected both by the pandemic (with China still facing outages and closures due to coronavirus outbreaks) and the Ukraine war. In addition, he pointed to the increase in interest rates as another of the reasons, while as a counterpart he underlined the low unemployment rates.
They registered declines in private investment, in real estate (residential and non-residential), in federal, state and local government spending, which were partially offset by increases in exports and consumer spending. Imports, for their part, increased.
The BEA explained that, within federal government spending, the decrease in non-military spending was impacted by the sale of 72.3 million barrels of crude from the Strategic Petroleum Reserve (SPR), according to data from the Department of Energy.
The GDP data was released a day after the US Federal Reserve (Fed) raised at 0.75 points the official interest rate for the second month in a row and will not rule out another “unusually high” increase in September if inflation continues to rise.
The IMF estimated that the US economy will grow by 2.3%
At the press conference he offered on Wednesday after announcing the new rate hike, the president of the Fed, Jerome Powell, ironed out the fear that the return to a more aggressive fiscal policy will end up generating a recession in the world’s largest economy. “I don’t think the US economy is likely to be in a recession right now,” Powell said.
Last Tuesday, the International Monetary Fund (IMF) published its forecasts and calculated that the US economy will grow by 2.3% this year and 1% next year, estimates that reduce those of April by 1.4 and 1.3 points, respectively.
The institution assured that, although it does not foresee that the US economy will enter a recession this year and in 2023, a “small shock might be enough” to take her to that stage. Wall Street opened this Thursday on mixed terrain and its main indicator, the Dow Jones Industrials, gained a slight 0.08%, after the contraction of the US economy was announced.