U.S. GDP’s Annual Rate Decreases for 2nd Consecutive Quarter – Consumer Sentiment Weakens
The Bureau of Economic Analysis (BEA) released on Thursday, July 28,2022, the advanced estimate of the U.S. real gross domestic product. Currently based on incomplete source data or subject to further revision, the annual rate of 0.9% in the 2nd quarter is the second consecutive decrease, having fallen to an annual rate of 1.6% in the 1st quarter— a reversal of the previous six quarters of positive annual rates. Increase in exports and personal consumption expenditures (PCE) partially offset the decrease in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment. During the same period, current-dollar GDP increased 7.8% at an annual rate, or $465.1 billion, compared to 6.6%, or $383.9 billion, in the previous quarter; and the price index for gross domestic purchases increased 8.2%, compared to an 8.0% increase in the 1st quarter, while the PCE price index increased at the same rate as the 1st quarter by 7.1%.
Although the official arbiter of recessions in the U.S. is the National Bureau of Economic Research (NBER), it usually doesn’t make a recession determination until long after a significant decline in economic activity, spread across the economy for more than a few months. While two straight quarters of declining economic output meets a commonly used definition of recession, most economists surveyed in July by The Wall Street Journal “expect the economy to grow in the 3rd quarter and in 2022 as a whole, though lately they have lowered their estimates.” Being described as a “sharp and necessary deceleration rather than a recession—the slower growth needed to rebalance the economy’s supply and demand for goods and services impacted during the pandemic, and stabilize wage growth and inflation, the “GDP report underscored the challenges facing U.S. businesses, households, and policy makers—including high inflation, weakening consumer sentiment, and supply-chain volatility.”
Bureau of Economic Analysis (BEA): https://www.bea.gov/news/2022/gross-domestic-product-second-quarter-2022-advance-estimate