(updated with details)
PARIS/WASHINGTON, Aug 25 (Reuters) – The contraction in the U.S. economy in the second quarter was somewhat less than initially estimated as consumer spending dampened some of the slowdown, allaying fears of a impending recession amid tighter Federal Reserve (Fed) monetary policy.
The gross domestic product (GDP) of the world’s largest economy fell 0.6% at an annualized rate over the April-June period, according to the Commerce Department’s second estimate released on Thursday, against a drop of 0.9% in first estimate. In the first quarter, the decline was 1.6%.
Economists polled by Reuters on average expected a contraction of 0.8% in the second quarter.
While the US economy has just suffered two consecutive quarters of decline, which corresponds to the technical definition of a recession, other broader instruments for measuring economic activity rather suggest a slowdown.
Retail sales excluding automobiles, fuel, building materials and food services, for example, rose more than expected in May, June and July. Industrial production hit a record high in July, while business spending on equipment was particularly strong. The labor market also continues to create jobs at a sustained pace.
However, the risk of a recession has increased in the United States with the increase since March of 225 points in the rates of the American Federal Reserve.
Fed Chairman Jerome Powell’s much-anticipated speech Friday at the annual central bankers’ conference in Jackson Hole, Wyoming, may shed new light on the U.S. central bank’s ability to rein in the economy without provoking a recession. (Written by Claude Chendjou, with Lucia Mutikani in Washington, edited by Sophie Louet and Kate Entringer)