A job vacancy poster at a restaurant in Marin City, California on August 5, 2022 ( GETTY IMAGES NORTH AMERICA/JUSTIN SULLIVAN )
U.S. gross domestic product (GDP) contracted slightly less than originally forecast in the second quarter, by an annualized 0.6%, but remains in decline, which could send the world’s largest economy in recession.
The Commerce Department’s second estimate released on Thursday is 0.3 points higher than the first estimate (-0.9%), announced at the end of July.
Already in the first quarter, US GDP fell by 1.6%.
The commonly accepted definition of a recession is two consecutive quarters of declining GDP, but many economists, as well as the Biden administration, argue that the economy is not necessarily in a recession, however, because of other more favorable indicators. , like the labor market which remains dynamic.
“Recent data on employment and consumption confirm that the economy is not in recession”, judge Lydia Boussour of Oxford Economics, while weekly applications for unemployment benefits fell on Thursday.
The Commerce Department points out in its report that the difference between the first and second GDP estimates is mainly related to the fact that consumer spending was better than initially estimated.
From April to June, they increased by 1.5% instead of 1% in the first assessment, whereas they had advanced by 1.8% in the 1st quarter.
Inventories, which distributors have struggled to sell in the face of demand slowed by rising prices, still weigh heavily in the slowdown in the world’s largest economy, costing 1.8 points of growth. But this is less than in the first estimate.
The reduction in spending by state and local authorities was slightly less than initially estimated (-1.8%).
On the other hand, the fall in the real estate market, handicapped by the rise in interest rates in an environment of already very high prices, worsened. Residential investment tumbled 16.2% from a 14% drop in the first estimate and a 0.4% rise in the first quarter.
“A shaky housing market and deteriorating confidence in the economy are clear signs that high inflation and rising borrowing costs are weighing on the economy,” added Lydia Boussour.
Oxford Economics forecasts “a modest rebound in GDP in the third quarter before slowing markedly as we approach 2023”.
On the quarter alone, the decline in US GDP is 0.1% if we simply compare to the previous quarter, as do other advanced economies. The United States favors the measurement of GDP at an annualized rate, which compares to the previous quarter and then projects the evolution over the entire year.