The United States economy shrank again from April to June, signalling that the nation may be approaching a recession. The commerce department announced on Thursday, 28 July, that the gross domestic product (GDP) declined at an annual rate of 0.9 percent in the second quarter after an annual fall of 1.6% in the first three months.
The report, which comes as the Joe Biden administration prepares for a midterm election season, has marked a downfall in the President's approval ratings and increased the likelihood of the Democrats losing control of the House and the Senate.
On Wednesday, 27 July, the Federal Reserve raised its benchmark interest rate by sizeable three-quarters of a point for a consecutive time in a bid to control the worst inflation in four decades.
This will further burden consumers and businesses already struggling under the weight of inflation and ramped up borrowing costs, news agency AP reported.
However, White House officials have tried to hush down conversations around recession, contending that the economy remains strong.
Thursday’s first out of three government estimates of GDP for the April-June quarter is a dramatic weakening compared to the 5.7 percent growth the country's economy witnessed in 2021.
Amid this, manufacturing is declining too – the country's supply chain bottlenecks have made it difficult for factories to fulfill orders.
The Institute for Supply Management’s (ISM) manufacturing index, revealed that along with the factory boom dropping to its lowest in two years in June, new orders declined too.
(With inputs from AP and Bloomberg.)
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