The economy shrank 0.6% in the second quarter compared to the same period last year – the second consecutive quarter that the country’s gross domestic product shrank, signaling the start of a recession, according to the latest data.
The U.S. Department of Commerce released a revised reading of its second-quarter figures on Thursday — nearly a month after the initial report measured a 0.9% contraction from the year before, Fox Business reported.
In the first quarter of this year, GDP fell by 1.6% – the worst performing quarter since spring 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 recession, citing low unemployment, wage growth and robust consumer spending.
Americans are suffering from 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 below June’s 9.1% inflation.
President Biden and White House officials have touted the slight cooling in inflation as “0% inflation” — even though the consumer price index rose last month compared to the same period of the previous year.
The Federal Reserve has taken aggressive steps to cool inflation, including a three-quarters percentage point rate hike for two consecutive months.
The Fed hopes to bring about a “soft landing” for the economy – to bring rampant inflation under control without triggering a massive downturn marked by layoffs.
Larry Summers, Secretary of the Treasury during the Clinton administration, urged the Fed to state publicly that more unemployment will be needed to curb inflation.
Fed Chair Jerome Powell told reporters last month that he didn’t think the US was in recession.
“I don’t think the US is in a recession right now, and the reason is that too many parts of the economy are underperforming,” Powell said.
“This is a very strong job market… It doesn’t make sense that the economy would be in a recession when things like this happen.”