The United States (US) economy shrank 0.6 percent in the second quarter of 2022 on an annual basis (year on year / yoy). This figure is up from the estimated 0.9 percent contraction a month ago, according to data released Thursday (08/25/2022) by the US Department of Commerce.
The data update mainly reflects an upward revision to consumer spending and private inventory investment that was partially offset by a downward revision to residential fixed investment, a second estimate showed.
The decline in real gross domestic product (GDP) reflected a decline in private inventory investment, housing fixed investment, federal government spending, and state and local government spending, partially offset by increases in exports and consumer spending.
Imports, which are a deduction in GDP calculations, increased. With a first-quarter decline of 1.6 percent, a second consecutive quarter of negative growth would meet the technical definition of a recession.
Desmond Lachman, senior fellow at the American Enterprise Institute and former official at the International Monetary Fund (IMF), told Xinhua earlier that the official determination of whether the country has entered a recession was made by the National Bureau of Economic Research which they did “only after a delay of several months.”
“The upward revision to underlying demand and the first reading on the earnings side undermine the argument that the economy is currently in recession,” Jay Bryson and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis.
Real personal consumption spending (PCE) was revised up by half a percentage point to an annualized rate of 1.5 percent, they said.
Nevertheless, Bryson and Seery note that second-quarter weakness still reflects a “real slowdown” in economic activity, and “we expect the economy to fall into a mild recession early next year.”
The National Association for Business Economics (NABE) survey released Monday (22/8/2022) showed about a fifth of panelists believe the United States is already in recession, while 47 percent expect the recession to begin in late 2022 or the first quarter of 2023.