US Economy: US economy shrank 0.9% in last quarter, country nears recession

The US economy shrank for the second straight quarter from April to June, shrinking at a 0.9% annual pace and raising fears that the country could be approaching a recession.

The Commerce Department on Thursday reported a decline in GDP. The U.S. economy has the largest scale after a 1.6% annual decline from January to March. Successive quarters of falling GDP is an unofficial indicator of a recession. Although it is not certain.

This report comes at a crucial time. America's consumers and businesses continue to struggle with the burden of punishing inflation and high borrowing costs. On Wednesday, the US Federal Reserve raised its benchmark interest rate by three-quarter points for the second time in a row, in its blow to contain the worst inflation outbreak in four decades.

Through this the Federal Reserve is hoping to achieve a notoriously soft landing on the economy, an economic downturn that manages to rein in prices without reining in the recession. Federal Reserve Chairman Jerome Powell and several economists have said the economy is looking a bit weak. They suspect it is in recession. Many of them in particular point to a stable strong labor market, suggesting 1 million jobs to be created and an unusually low 3.6% unemployment rate.

There is still a way out for the recession. The US economy may not have performed much better in the spring, after lagging from January to March. On Thursday morning, the government will reveal how weak economic growth was in the April-June quarter. Perhaps provide clues about whether the United States is approaching a recession.

Forecasters surveyed by data firm FactSet estimated the country's GDP, the broadest measure of economic output, to grow 0.8% annually over the past quarter. It will be modest, a sharp recovery on the economy's 1.6% contraction in the January-March quarter. Yet the sluggish quarterly growth will be significantly weaker than the economy's 5.7 per cent growth achieved last year. It was the fastest calendar year extension since 1984, showing how strongly the economy bounced back from the brief but brutal pandemic recession of 2020.