U.S. gross domestic product (GDP) shrunk between April and June, according to data released Thursday by the Commerce Department, marking the second-straight quarter of economic contraction.
GDP fell at a yearly pace of 0.9 percent in the second quarter, according to the Commerce Department’s first estimate of economic growth over the previous three months. Put simply, the U.S. economy would shrink by nearly 1 percent if the second quarter’s pace of growth lasted for an entire year.
Most economists expected GDP to fall for the second consecutive quarter as the economy faced more pressure from high inflation, rising interest rates, slowing job growth, falling home sales and other headwinds.
While the economy was almost certain to slow after growing 5.7 percent in 2021, experts have become more fearful of the U.S. slipping into recession after GDP fell at an annualized rate of 1.6 percent in the first quarter.
Two straight quarters of negative economic growth have long been used as a rule of thumb to determine when the U.S. is in recession and is the formal threshold for a recession in other countries. But economists in the U.S. consider a broader range of data when determining if the U.S. is in recession.
The U.S. has added 2.7 million jobs since the start of 2022 and consumer spending has continued to increase even amid high inflation. Economists say it may too soon to know if the U.S. is in recession, if at all, given the strength of the job market.
–Updated at 8:39 a.m.