<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1656605983300,"cms.content.publishUser":{"_ref":"00000162-07af-d172-a563-4fefeeac0001","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1656605983300,"cms.content.updateUser":{"_ref":"00000162-07af-d172-a563-4fefeeac0001","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_56454796", "obj": {"id":"27789","width":"16","height":"9","video":"1042573"} }); rn","_id":"00000181-b569-d447-ad8b-f5eb3d460000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedThe economy will shrink for a second consecutive quarter, a regional Federal Reserve bank projected Thursday in the latest sign of recessionary risks.
Gross domestic product growth will fall to a negative 1% annual rate, the Atlanta Fed’s “GDP Now” tracker said in an update. The economy contracted at a 1.6% annual rate in the first quarter.
Thursday’s update was the first to show an economic contraction for the second quarter based on unexpectedly weak reports on consumer spending and business investment.
WORLD BANK CHIEF ECONOMIST ‘SKEPTICAL’ ABOUT US ABILITY TO AVOID RECESSION
Personal consumption expenditures grew just 0.2% in May, the Bureau of Economic Analysis reported earlier Thursday morning. That growth was not sufficient to keep pace with inflation, meaning that real consumer spending fell in the month.
“A drop in personal consumption expenditure has been brewing for some time, but the question is how long it will persist,” noted Cailin Birch, a global economist at the Economist Intelligence Unit.
A number of high-profile economists and investors have warned in recent weeks that the risks of a recession are rising because of the Fed’s efforts to rein in inflation. The Fed is attempting to slow spending by raising interest rates, a process that many fear will tip the economy into a downturn — especially because of how far inflation is above the central bank’s target of 2%. Inflation stood at 6.3% in May, according to the measure preferred by Fed officials.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Nevertheless, labor market indications suggest that the United States is a long way from recession. At 3.6% in May, the unemployment rate is near its lowest level in decades. Hiring, too, has shown few signs of weakness.
There is no official government definition of a recession, but the National Bureau of Economic Research, a private academic group, defines it as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” Most people view two consecutive quarters of negative GDP growth as indicative of a recession.
