We don’t think we’re in a recession just yet. But the bigger point here is that the underlying trend in domestic demand is weakening.Senior economist at Bank of America, Aditya Bhave, on new GDP numbers that show the U.S. economy contracting.
- Why It Matters: This data raises concerns the U.S. could be in a recession.
- The GDP measures the output of total goods and services in the U.S. — overall economic productivity. Think of it like a report card we get every three months about how the *overall* economy is doing!
- The first reading of the GDP for the second quarter of 2022 (April – June) is -0.9%.
- When the GDP is positive, it reflects a growing economy; when it's negative, it reflects contraction (a shrinking economy).
- Commonly, two consecutive quarters of negative GDP is a sign of a recession. The U.S. already had a negative reading in the first quarter of the year (Jan – March); this is the first insight into the second quarter.
Something To Consider: This is the first of three readings on the GDP for the second quarter (we receive an "advanced," a "preliminary" and a "final' reading). We won't get the final reading until September, so there could be some revisions to the number you see reported at this time.
A recession is typically by the National Bureau of Economic Research, a non-partisan, non-profit agency that tracks U.S. business cycles from peaks to valleys. The GDP isn't the only data point that determines a recession, but because it measures the "market value" of the economy, it's a big one!
This article pre-dates the data release but we like it because it gives you a broad overview of the debate over recession: READ HERE
by Jenna Lee,