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Economic output in the USA fell for the second quarter in a row. Technically, this counts as a recession.
The US economy contracted 0.9 percent in the second quarter, annualized. This was after economic output had already fallen by an annualized 1.6 percent in the first quarter.
This is sobering and came as a negative surprise to many experts, who had expected slight growth of 0.4 percent. A “technical recession” is spoken of when economic output falls for two quarters in a row.
But for many, the downturn might not yet feel like a recession: the US economy would have to shrink more for that to happen. And the labor market is still proving to be very robust.
Interest rate hike also weighs
Nevertheless, the fact that the US economy has continued to shrink is not good news. In addition, on Wednesday the US Federal Reserve once again raised interest rates sharply to counter the horrendously high inflation of over nine percent. But these higher interest rates could also slow down the economy.
How the US is doing economically is not only of interest to Americans. Countless companies, including local exporters, depend on their products continuing to be in demand in the USA. It was not for nothing that the USA was long considered the “locomotive of the global economy”.