Washington: The U.S. economy shrank from April through June for a second consecutive quarter, contracting at a 0.9 percent annual pace and raising worreis that the nation may be approaching a recession.
The fall that the Commerce Department reported Thursday in the gross domestic product (GDP)- the broadest gauge of the economy, followed a 1.6 percent annual drop from January through March. Straight quarters of falling GDP constitute one informal, though not definitive, indicator of a recession. The report comes at a critical time. Consumers and business entities have been struggling under the weight of punishing inflation and higher borrowing costs.
On Wednesday, the Federal Reserve raised its benchmark interest rate by a sizable three-quarters of a point for a second straight time in its push to conquer the worst inflation outbreak in four decades. The Fed is hoping to achieve a notoriously difficult "soft landing": An economic slowdown that manages to rein in rocketing prices without triggering a recession.
Federal Reserve Chair Jerome Powell and many economists have indicated that while the economy is showing some weakening, they doubt it is in recession. Many of them point, in particular, to a still-robust labour market, with 11 million job openings and an uncommonly low 3.6 percent unemployment rate, to suggest that a recession, if one does occur, is still a ways off.
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