The US Department of Commerce improved the estimate of the fall in GDP to 0.6% in the II quarter

The gross domestic product (GDP) of the United States, according to an updated estimate of the country’s Department of Commerce, got down by 0.6% in the II quarter year on year. At the end of July, the agency reported a fall of 0.9%.

The recession of the American economy has been going on for two quarters. According to the results of the first quarter, it amounted to 1.6%. The decline in GDP is due to a reduction in private investment in inventories and fixed capital, as well as in spending by the federal and local governments. The decrease in these indicators was partially offset by an increase in exports and consumer spending, which, among other things, slowed down the rate of economic decline in the second quarter.

GDP data, writes Bloomberg, indicate a sharp slowdown in US economic growth in the first half of the year. The agency drew attention to a particularly strong discrepancy between GDP and another, less popular indicator – gross domestic income (+1.4% in Q2 after +1.8% in Q1), which again updates the discussion about whether the US economy is showing signs of a recession or not. Analysts, notes Bloomberg, expect economic recovery in the III quarter.

At the end of July, after the publication of a preliminary estimate of the fall in GDP, US President Joe Biden declaredthat the economic downturn is “not surprising” after last year’s record growth and amid attempts by the Fed to slow inflation. About the absence of reasons to talk about a recession declared and the US Treasury. Despite Washington’s claims, the ongoing decline in GDP provides Republicans with a “tempting opportunity” to blame the Democrats and the Biden administration for the onset of a recession, which could play into their hands in the upcoming House elections. wrote Politico.

July 27 US Federal Reserve announced on raising the base interest rate by 75 basis points to 2.25-2.5% per annum. This increase was the fourth in the last six months. In March, for the first time since 2018, the regulator raised the rate by 0.25 percentage points to 0.25-0.5% per annum. The next increase took place in early May – immediately by 0.5 percentage points to 0.75-1%. This increase in the rate was due to the desire of the regulator to slow down inflation.

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