(CTN News) – According to government data released Thursday, the U.S. economy shrank 0.6% from April through June, unchanged from the previous estimate.
The economy contracted for the second consecutive quarter, an informal indicator of a recession. In spite of a strong and resilient job market, most economists believe the world’s largest economy is not yet in a recession.
White House’s Deese says the strong dollar reflects the strength of the U.S. economy
However, the Federal Reserve is ratcheting up interest rates to combat inflation, putting the U.S. economy at risk of one.
Consumer spending rose at a 2% annual rate, but business inventories and housing investments fell.
This year, the U.S. economy has been sending mixed signals. First-half GDP, or gross domestic product, declined in 2022.
However, the job market remains strong. According to government records going back to 1940, employers are adding an average of 438,000 jobs a month this year, making it the second-best year for hiring (behind 2021).
The unemployment rate is 3.7%, which is low by historical standards. In the United States, there are about two jobs for every unemployed person.
To rein in consumer prices, which were up 8.3% in August over a year earlier despite plummeting gasoline prices, the Fed has raised interest rates five times this year.
Higher borrowing costs increase the risk of a recession and higher unemployment. Jerome Powell, Fed Chair last week, said, “We have to get inflation under control.”. “I wish it would be painless.”. But it won’t be.
The Commerce Department released its third and final report on second-quarter growth on Thursday. A first look at the U.S. economy’s performance in July-September will be released on Oct. 27.
An average economist expects GDP to expand at a modest 1.5% annual rate in the third quarter, according to a FactSet survey.
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