Business Hub – Cairo:
The US economy contracted again in the second quarter of the year, in the middle of a significant tightening of monetary policy in an attempt by the Federal Reserve to curb inflation, Which may raise fears in the financial markets that the economy is already in a recession.
The Commerce Department said in its estimate of gross domestic product today that it fell 0.9 percent year-on-year in the second quarter.
Estimates ranged from a low deflation rate of 2.1 percent to a high growth rate of 2.0 percent. The economy contracted 1.6 percent in the first quarter.
A contraction for two consecutive quarters meets the standard definition of a recession, According to “Reuters”.
But the National Bureau of Economic Research, He is the one who officially determines the recessions in the United States, A recession is defined as “a noticeable decline in economic activity in various sectors of the economy that lasts for more than a few months and is usually observed on indicators of production, employment, real income, and others.”
Job growth averaged 456,700 per month in the first half of the year, yielding solid wage gains. However, the risks of economic downturn increased. Home construction and sales have fallen while business and consumer sentiment has plummeted in recent months.
A separate report from the US Department of Labor today showed that first-time applications for state unemployment benefits fell by five thousand to a seasonally adjusted number of 256 thousand in the week ending July 23.
Claims remained below the range of 270,000 and 350,000 that economists say indicates an increase in the unemployment rate. But slower growth could prompt the Federal Reserve to reverse the accelerating pace of monetary policy tightening, but it will depend on the pace of inflation well above the central bank’s 2 percent target.
