The U.S. economy shrank for the second consecutive quarter, fueling fears that a recession is looming. According to data from the Commerce Department, the GDP was down by 0.9% from April through June.
While two consecutive quarters of negative growth is one definition of a recession, the Biden administration has suggested that economists aren’t ready to call this a recession because of other, more positive economic factors such as low unemployment and millions of available jobs.
“Policymakers will no doubt be tying themselves in knots trying to explain why the U.S. economy is not in recession,” Seema Shah, chief global strategist at Principal Global Investors, told Fox Business. “However, they make a strong point. While two consecutive quarters of negative growth is technically a recession, other timelier economic data are not consistent with recession.”
The National Bureau of Economic Research will ultimately decide whether the current conditions are a recession. According to CNBC, many economists believe the U.S. will eventually enter a recession but don’t expect it to happen until later this year or in 2023.
The decline in GDP was fueled by inflation, which continues to surge. According to the Associated Press, the economy grew at a 7.8% annual pace from April to June, but those gains were wiped out by inflation.