NewsUSA and CanadaDownturn in the US economy was not as pronounced as thought

    Downturn in the US economy was not as pronounced as thought


    A view of a job fair in West Hollywood, Calif., on Sept. 21, 2021. (AP Photo/Marcio Jose Sanchez, File)


    The US economy shrank at an annual rate of 0.6% between April and June, the government said on Thursday, a slight improvement from its initial estimate. This was the second consecutive quarter of economic contraction, an informal indicator of recession.

    However, most economists doubt that the economy is on the verge of a recession, given that the labor market remains strong, with strong hiring, low unemployment and widespread vacancies. Still, inflation is near a four-decade high and is punishing consumers and businesses. And the Federal Reserve’s aggressive efforts to control inflation through sharp increases in interest rates are raising the risk of an eventual recession.

    In revised figures it announced Thursday, the Commerce Department calculated that gross domestic product, the broadest measure of economic output, shrank last quarter, though less than the 1.6% annual decline in the January period. -March. In its previous estimate for the April-June quarter, the government indicated that the economy contracted 0.9%.

    Consumer spending, which accounts for almost 70% of US economic activity, grew last quarter, but at an annual rate of 1.5%, down from 1.8% from January to March.

    By contrast, government spending and business investment declined.

    In its campaign to curb inflation, the Fed has raised its benchmark interest rate four times this year in ever-increasing increments. By raising lending rates, the central bank is making mortgages or car or business loans more expensive. The idea is for consumers and businesses to borrow and spend less, which will help cool the economy and curb inflation.

    Source: El Nuevo Herald

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