Home WORLD AMERICA The US economy is contracting again, raising fears of a recession

The US economy is contracting again, raising fears of a recession

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The contraction of GDP is 0.9% at an annualized rate, a measure favored by the United States, which compares to the previous quarter and then projects the evolution over the whole year, according to figures released Thursday by the Commerce Department.

Weak growth was expected, after a decline, in the first quarter already, of 1.6%.

The commonly accepted definition of a recession corresponds to two consecutive quarters of decline in the GDP. But the current situation doesn’t look like a recession to mereacted Joe Biden.

Treasury Secretary and Chair of the US Federal Reserve, Janet Yellen, also pointed out that the US economy remains resilienteven if she was slowing down.

Inflation reached a new record in June, at 9.1% over one year. And slowing it down requires a cooling of economic activity.

However, it is possible to slow inflation and maintain a strong labor marketaccording to the President of the Fed.

Semantic War

: major job losses and massive layoffs”,”text”:”Most economists and most Americans have a similar definition of a recession: major job losses and massive layoffs”} }”>Most economists and most Americans have a similar definition of a recession: major job losses and massive layoffssaid the Secretary of the Treasury during a press conference.

This is not what we currently observeshe underlined, highlighting the more than one million jobs created over the last three months, and preferring to mention an economy in transition towards more stable and sustainable growth.

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The opposition, however, castigates Joe Biden’s recession. The economy has plunged for two quarters in a rowcommented the Republican Party on Twitter.

we’re in a recession”,”text”:”The government just announced what every American has been feeling for nearly a year – we’re in a recession”}}”>The government just announced what every American has been feeling for nearly a year – we’re in a recessionlamented Kevin McCarthy, leader of the elected Republicans in the House of Representatives.

He also accuses the Democrats of [préférer] redefining recession than restoring a healthy economy.

The decline of GDP in the second quarter reflects lower business investment and home purchases by households, the Commerce Department said. Governments, both federal and local, also curbed their spending.

Consumption, the locomotive of US growth, has held up, but thanks to spending on services, notably rents, the prices of which have soared with inflation. Purchases of goods have declined.

The decline of GDP over the quarter is 0.2% simply comparing to the previous quarter, as do other advanced economies.

So, has the United States plunged into recession or not? The debate, which had already been raging for several days, seems to have started again.

We should avoid a semantic battle. Sometimes people use the word recession to say it’s really bad inflation. »

A quote from Janet Yellen, Secretary of the Treasury and Chair of the US Federal Reserve

We doubt the economy is in recession, given the strength of the labor marketunderline for their part, in a note, Lydia Boussour and Kathy Bostjancic, economists for Oxford Economics.

The unemployment rate, at 3.6%, is very close to its pre-pandemic level, which was the lowest in 50 years, and employers are still struggling to recruit.

The decline of GDP reinforces stagflation [stagnation de l’activité et inflation]and raises red alert for recessionwarns on Twitter the economist Mohamed El-Erian, president of Queens’ College at the University of Cambridge and economic adviser to the insurer Allianz.

Listening to the National Bureau of Economic Research

Only one organization in the United States is authorized to officially determine the periods of recession: the National Bureau of Economic Research (NBER). However, his announcements come several months later.

We consider a series of indicatorsdetails on its website the NBERwho also observes the extent of the decline in activity.

The International Monetary Fund (IMF), for its part, has revised its growth forecast for the United States significantly downwards in 2022 and now only expects 2.3%, while it still anticipated 3.7% in april.

the GDP contracted by 3.4% in 2020 as a result of the COVID-19 crisis, before rebounding by 5.7% in 2021.

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