The Federal Reserve’s main gauge of tracking US economic activity currently estimates that gross domestic product contracted even more in the second quarter than in the first, raising concerns that the country may already be in recession. .
The latest reading of the Atlanta Federal Reserve Bank’s GDPNow model, which is considered the central bank’s primary tool for measuring growth in real time, indicated on July 1 that real gross domestic product rose in the second quarter. 2.1% shrank from a seasonally adjusted annual rate.
That’s down 1.1% from the -1.0% value of GDPNow the day before, when the meter turned negative. The tracker’s next estimate will be released on Thursday.
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While the official preliminary estimate of Q2 performance will not be available until the end of the month, these preliminary measurements show the second consecutive quarter of negative growth in the economy after GDP shrank by 1.6% in Q1†
If further measurements confirm that the economy has indeed contracted in the second quarter, the technical criteria for a recession, defined by two consecutive quarters of negative growth, will be met. However, the National Bureau of Economic Research (NBER) is the authority that makes the official decision.
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Some economic slowdown was expected as the Federal Reserve began raising interest rates earlier this year in an effort to cool inflation, which hit a four-decade high in May.
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The central bank’s challenge is to bring rising prices down without going too far in slowing growth, but Fed Chairman Powell said last week that failing to contain inflation poses a greater risk to the economy. would be in a recession.