The United States Has Entered into a Recession
This comes on the heels of a 1.6 percent drop in the previous quarter, which spanned January to March.
The unofficial definition of a recession is a shrinking economy for two quarters in a row, but in the United States, the National Bureau of Economic Research must make an official declaration, which it has not yet done.
Nonetheless, this is bad news for Joe Biden’s administration as it prepares for a series of midterm elections at the end of 2022, which Republicans are expected to win.
The White House, on the other hand, has argued that parts of the American economy remain strong, and government officials have stated that they believe the US economy is fundamentally sound.
The White House, seemingly anticipating this event, published a blog last week attempting to explain that, while GDP was shrinking, there were other positive signs in the economy.
They predicted continued growth in real income minus transfers, real spending, industrial production, and employment compared to April 2020, when the pandemic’s last recession occurred.
The White House also predicted that more than a million jobs would be created in the second quarter of the year, despite GDP contraction.
The Federal Reserve Chair, Jerome Powell, stated yesterday (27 July) that he does not believe the US economy is in a recession.
“I do not believe the United States is currently in a recession,” he said, explaining that “too many sectors of the economy are performing exceptionally well.”
Price stability is what keeps the economy running.”
A decision on whether the United States has entered the official definition of a recession is likely some time away, and the initial figure of a 0.9 percent economic contraction is subject to revision as new data becomes available.
Nonetheless, with rising food and fuel prices pushing inflation to 9.1 percent, many people will be feeling the pinch whether the economy is officially in recession or not.
According to CNN, some economists believe that the US economy appears to have crashed in part because businesses were stockpiling at the end of 2021.
According to Anna Rathbun, chief investment officer at CBIZ Investment Advisory Services, stockpiling boosted growth in the fourth quarter of 2021 that would otherwise have been spread out over the first months of 2022.
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