The United States GDP contracted 0.9% in the second quarter of 2022, putting the country into a technical recession after two consecutive quarters of negative growth.
The GDP numbers defied expectations, with experts predicting 0.5% growth. This followed a shrink of 1.6% in the first quarter of this year putting the US into a technical recession by global standards.
Unlike in the UK and much of the rest of the world, the US approaches recession differently. It doesn’t determine recession by two consecutive quarters of negative growth.
Instead, the National Bureau of Economic Research determines recession based on a range of factors such as employment, GDP and real income.
Nevertheless, two quarters of negative GDP growth have already dented markets. The two quarters of declining GDP means the economy shrank in the first six months of the year.
The two-year treasury yields plunged, already weakened by the Federal Reserve raising interest rates by 0.75% yesterday in an attempt to combat runaway inflation.
The White House has pushed back on the idea that the US is in a recession as the midterm elections approach.
“When you are creating almost 400,000 jobs a month, that is not a recession,” said treasury secretary Janet Yellen in an interview on Sunday.
According to a recent Morning Consult poll, thirteen out of twenty Americans already believed the country was in an economic decline before the latest GDP numbers were published.