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Saturday, October 1, 2022

US Economy Shrinks for a Second Quarter, Sparks Fears of Imminent Recession

Gross Domestic Product (GDP) rate fell at a 0.9% annualized rate after a 1.6% decline in the first three months of the year

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UNITED STATES: The US economy suffered a shrinkage in its second quarter, raising Imminent fears of a recession, as a record recession rate undercut customer spending and Federal Reserve interest rate spikes affected business ventures and housing demand.

Gross Domestic Product (GDP) rate fell at a 0.9% annualized rate after a 1.6% decline in the first three months of the year, the Commerce Department’s preliminary estimate reported on Thursday. Personal consumption rose at a meagre rate of 1%, reducing from the prior period.

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A Bloomberg survey of economists estimated that there would be a 0.4% increase in GDP and a 1.2% rise in consumer spending.

Two-year Treasury Yields also dropped after the report exposed that Fed rate increases may not occur, while US stock futures remained lower and the dollar eliminated gains.

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The report also highlighted decreases in business ventures, government spending, and residential investment. 

Moreover, it appears that American purchasing power will be adversely affected. Tighter Federal Reserve monetary policy has denigrated interest rate-sensitive sectors like housing. That is highly likely to impose more pressure on the US recession.

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Also Read: “Global Economy Teetering on Edge of Recession”: IMF Issues Warning

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