Amid Biden's recession denial, US economy contracts again in 2nd quarter

By Ovunc Kutlu

ANKARA (AA) – The US economy contracted at an annual rate of 0.9% in the second quarter of 2022, according to the Commerce Department’s first reading on Thursday.

The market expectation was an expansion of 0.5%, after the world’s largest economy contracted 1.6% in the first quarter.

The data comes just days after President Joe Biden tried to dismiss recession fears.

“We’re not going to be in a recession,” he told reporters earlier this week.

“My hope is we go from this rapid growth to a steady growth, and we’ll see some coming down, but I don’t think we're going to, God willing, that we’ll see a recession.”

The current‑dollar GDP stood at $24.85 trillion in the second quarter.

The Fed’s preferred inflation indicator, the core PCE price index, which excludes food and energy prices, increased 4.4% in the second quarter.

The market estimate for the index was a 4.5% jump, following a 5.2% increase the first quarter.

Many fear that the US economy could be drawn into a recession due to the Federal Reserve’s aggressive monetary tightening.

However, GDP is only one of many factors that the US National Bureau of Economic Research considers in a recession.

According to its definition, a recession “involves a significant decline in economic activity that is spread across the economy and lasts more than a few months ... a recession must influence the economy broadly and not be confined to one sector.”

Fed Chair Jerome Powell said on Wednesday that the central bank will be watching the GDP figures “carefully,” adding that the “slowdown in the second quarter is notable.”

He also tried to calm recession worries, saying, “I do not think the US is currently in a recession. The reason is that there are too many areas of the economy that are performing too well.”

His comments came after the Fed raised the target range for the federal funds rate to the 2.25%-2.5% range with a hike of 75 basis points.

That was after the bank increased its benchmark interest rate by another 75 basis points on June 15, the largest hike in 28 years.​​​​​​​