The nation’s Gross Domestic Product fell 0.9% in the second quarter of 2022.
According to the Bureau of Economics Analysis, this is the second consecutive quarter of negative growth of GDP. In the first quarter of 2022, real GDP decreased 1.6%.
“BREAKING: GDP fell .9% in Q2. Our economy is in poor health, and the Biden administration's tax-and-spend policies are only making it worse,” Rep. Dan Newhouse, R-Wash., said in a July 28 post on Twitter. “Republicans have solutions, and that starts with getting government out of the way so the American people can thrive.”
The BEA said contributing factors to the decrease in real GDP include “decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending and nonresidential fixed investment.” The BEA release also reported these culprits of negative growth were “partly offset by increases in exports and personal consumption expenditures (PCE).” Finally, imports — which are subtracted from GDP — increased in Q2.
Reuters reported the “standard definition” of a recession is a second straight quarter of negative growth in GDP.
That 0.9% negative growth in GDP is worse than many economists expected. Reuters reported the results of a recent independent poll of economists who, on average, predicted that GDP would rebound, with 0.5% of positive growth — which has been proven incorrect. Economists’ predictions range from a 2.1% rate of contraction to a 2.0% rate of growth.
The National Bureau of Economic Research officially declares when the U.S. is in a recession, and will likely not make that determination for several months, CNBC reported. However, two consecutive quarters of negative GDP is the “long-held basic view of recession,” because GDP is the “broadest measure of the economy and encompasses the total level of goods and services produced during the period.”
CNBC highlighted economic statistics that indicate a recession is coming soon or here already. Gross private domestic investment decreased 13.5% during the second quarter. Consumer spending increased 1%, despite an 8.6% increase in inflation. Spending on services increased by 4.1%, but this was offset by a 5.5% decline in spending on nondurable goods and a 2.6% decline in spending on durable goods.
The Wall Street Journal reported inflation rose to 9.1% in June of 2022, which is the single highest inflation rate in more than 40 years.
