US GDP shrinks by 1.6% in Q2

158
1
US GDP shrinks by 1.6% in Q2

The Commerce Department released its latest report on Wednesday showed that gross domestic product, the broadest measure of goods and services produced across the economy, shrank by 1.6% on an annualized basis in the three month period from January to March. The initial report released in April showed that GDP shrank by 1.4% on an annualized basis.

The contraction in the last quarter was the first drop in GDP since the second quarter of 2020, when the US was deep in the throes of the COVID-19 recession. The drop in 2022 was followed by a 6.9% expansion in the final three months of 2021, the last three months of 2021.

Economists expect a slowdown in the economy as the Federal Reserve increases interest rates to cool inflation and will be looking for indications of a full-fledged recession defined by two consecutive quarters of contractions.

The agency's advance estimate for the second quarter GDP was released on July 28. All eyes now turn to that.

The Atlanta Federal Reserve Bank's GDPNow tracker indicated earlier this month that the economy could be headed for a second-quarter drop in GDP, after showing that the economic growth has stalled in the spring to a flat 0%, a decline from its previous estimate of 1.3% on June 1 and 0.9% on June 8.