The Federal Reserve'sFederal Reserve's real-time model for tracking US economic activity has turned negative, signaling that the nation could already have entered a recession.
The GDPNow gauge, a widely watched measure from the Atlanta Federal Reserve BankFederal Reserve Bank, indicated Thursday that real gross domestic product shrank by 1.0% in the second quarter from April to June.
This preliminary reading shows the second quarter in a row of negative growth in the economy after GDP contracted 1.6% in Q 1. While the official advance estimate of Q 2 will not be released for another month, this preliminary reading shows the second quarter in a row of negative growth in the economy.
CONSUMER'SMARCHING FORWARD QUITE DIFFICULT If further readings confirm that the economy did shrink in Q2, the technical criteria for a recession that is defined by two consecutive quarters of negative growth will be met. The National Bureau of Economic Research NBER is the authority that makes the official determination.
Economists expect an economic slowdown from the interest rate hikes the Fed implemented as it attempts to rein in inflation, which hit a four-decade high in May.
Fed Chair Jerome Powell said on Wednesday that there was a risk that policymakers might go too far in slowing economic growth, but failing to bring inflation to heel represents a greater risk.
The GDPNow tracking tool indicated earlier this month that the economy was headed for a recession when it showed two weeks ago that economic growth fell to 0% in the spring.