The economy shrank by 0.6% in the second quarter compared to the same period last year — the second consecutive quarter that the nation’s gross domestic product contracted, thus signaling the onset of a recession, according to the latest data.
The US Commerce Department issued a revised reading of second quarter figures on Thursday — nearly a month after its initial report measured a 0.9% contraction compared to the year prior, Fox Business reported.
In the first quarter of this year, GDP fell by 1.6% — the worst performing quarter since the spring of 2020. At the time, much of the country was in lockdown due to the spread of the coronavirus.
Economists define a recession as two consecutive quarters of negative growth.
But the Biden administration denies that the economy is in a recession, citing the low unemployment, wage growth, and robust consumer spending.
Americans have been burdened with record levels of inflation.
Earlier this month, the Bureau of Labor Statistics released its report indicating that inflation rose 8.5% in July — which is slightly down from the 9.1% inflation rate from June.
President Biden and White House officials have touted the slight cooling of the rate of inflation as “0% inflation” — even though the consumer price index rose last month compared to the same period from the previous year.
The Federal Reserve has taken aggressive steps in an effort to cool inflation, including a three-quarters of a percentage point interest rate hike for two consecutive months.
The Fed is hoping to engineer a “soft landing” for the economy — getting rampant inflation under control without causing a massive downturn characterized by layoffs.
Larry Summers, the former treasury secretary during the Clinton administration, urged the Fed to declare publicly that more unemployment will be necessary in order to bring down inflation.
Fed Chair Jerome Powell told reporters last month that he did not think the US was in a recession.
“I do not think the US is currently in a recession, and the reason is there are too many areas of the economy that are performing too well,” Powell said.
“This is a very strong labor market…It doesn’t make sense that the economy would be in a recession with this kind of thing happening.”