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The US economy contracts 0.2% and enters a technical recession

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The economy of the United States contracted 0.2% in the second quarter of the year and thus chained two quarters of falls in the Gross Domestic Product (GDP), as a consequence of the global crisis derived from the war in Ukraine and runaway inflation.

The data published by the Bureau of Labor Statistics (BEA) confirms a second consecutive decline in GDP, which is traditionally considered a technical recession.

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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.

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%, the factors of this decline are high inflation, problems in the supply chain and the increase in interest rates. In return, he underlined unemployment.

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Likewise, there were decreases in private investment, in real estate (residential and non-residential), in spending by the federal, state and local governments, which were partially offset by increases in exports and consumer spending. Imports, which are a subtraction in the calculation of GDP, increased.

From the Executive of Joe Biden and from institutions such as the International Monetary Fund (IMF) or the Federal Reserve they have been preparing the ground for days before the expected bad data and insisting that there are enough economic indicators not to consider that the United States is entering a recession.

Yesterday, Wednesday, in statements to Efe, Jared Bernstein, one of the economic advisers to the US president, Joe Biden, insisted on defending that the recession is a concept that takes into account many factors.

“The idea of ​​a recession is defined by economists as a broad and persistent decline in economic activity. It is not necessarily two quarters of GDP decline, especially if those declines are slight.asserted Bernstein, who however said he did not want to paint a “too kind image” of the situation.

The data is known one day after the United States Federal Reserve (Fed) raised the official interest rate by 0.75 points for the second consecutive month and did not rule out another increase “unusually high” in September, if inflation continues to rise.

In June, the inflation rate in the world’s largest economy stood at 9.1%, something not seen since 1981.

Last Tuesday, the IMF published its forecasts and calculated that the US economy will grow 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.

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Source: Gestion

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