US, GDP decline for the second consecutive quarter
In the second quarter, as already happened in the first, the US GDP has undergone a new contraction of 0.9% and has strongly disappointed the expectations that pointed to a rise of 0.5%. The commonly accepted definition of a recession is that of two consecutive quarters of a decline in GDP, but many economists, as well as the administration of President Joe Biden, argue that the US economy is not in recession citing other more favorable indicators such as those on the labor market. The US economy contracted again in the second quarter due to sustained tightening dmonetary policy by the Federal Reserve, with four rate hikes since the beginning of the year and the last two by 75 basis points, to combat high inflation. The price rush, together with the scarcity of raw materials, started in the hardest phase of the pandemic Covid and then exploded with the invasion of Ukraine by Russia. Gross domestic product fell at an annualized rate of 0.9% last quarter, the Commerce Department calculates in its preliminary estimate. GDP in the first quarter had instead decreased by 1.6%.
Construction and home sales have weakened as business and consumer confidence has eased in recent months. There White House attempts to reject the idea that the US is in recession, perhaps fearful in view of the mid-term elections scheduled for November 8. President Joe Biden talks about an “unsurprising economic slowdown” given rate hikes to mitigate the rise in inflation. “After the historic economic growth of last year – Biden argues – and the recovery of 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.“. The tenant of the White House then claims:” We are on the right path. “And reiterates: “Our plan is focused on reducing inflation“Even Fed Chairman Jerome Powell yesterday in presenting the new rate hike denied that United States is in a recession.
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