The U.S. economy contracted in the second quarter, marking two consecutive quarters of negative growth, which is a common definition of a recession.
The gross domestic product (GDP) shrank 0.9 percent at an annualized pace, following a drop of 1.6 percent in the first quarter, the Commerce Department said Thursday. The market had penciled in a gain of 0.5 percent during the April-to-June span.
The decline in GDP reflected declines in inventories (-2.01 percent), residential investment (-o.71 percent), and government spending (-0.33 percent). But this was offset by gains in personal consumption expenditures (PCE) and exports.
“The U.S. economy is slowing at a significant rate,” economist Mohamed El-Erian tweeted shortly after the numbers were published. “Add to that the 8.7% price change in today’s data and the bottom line is clear: Deepening stagflation and flashing red recession risk.”…