According to most economists and commentators, when you have two consecutive quarters of negative GDP growth, that is the definition of a recession. And that is just exactly what has happened. The U.S. economy under President Biden shrank for a second consecutive quarter as inflation continues to surge.

According to data released from the Bureau of Economic Analysis (BEA), U.S. real gross domestic product (GDP) decreased an annual rate of 0.9% in the second quarter of 2022. This is an underperformance of expectations of economists surveyed by Bloomberg that the economy would grow by a modest 0.4% in the second quarter. That is a1.3% negative swing in their prediction. This comes after the first quarter GDP fell by 1.6%.

The Biden administration has pushed back on the assertion that economy is in a recession, despite the past two negative quarters, basically in an attempt to redefine what determines a recession, as they try to save their ass.

Here is what E.J. Antoni, a research fellow for regional economics at the Heritage Foundation, told the Daily Caller New Foundation (DCNF), “At the end of the day the average American family has been going through economic pain for the last 18 months; paychecks are going out the door faster than they’re coming in because of inflation, credit card debt is getting more expensive to service, regular folks can’t afford a home, gas and grocery prices are going up. In my opinion, if you go out and talk to regular Americans it is so blatantly obvious the economy is contracting.”

The lackluster growth in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment have attributed to this inflationary trend according to the BEA on Thursday.

​While the economy continues to shrink, prices remain sky-high and inflation continues to surge. One key indicator is the Consumer Price Index (CPI), which came in at 9.1% in June, the highest rate on record since 1981. Producer prices have increased even more drastically that what consumers have faced in recent months, hitting 11.3% in June.

The Federal Reserve’s increase of rates by 0.75% on Wednesday, coupled with earlier actions in March, May and June, has now jacked the central bank’s overnight interest rate from near zero to a level between 2.25% and 2.5%. That is the fastest tightening of monetary policy since former Fed Chair Paul Volcker battled double-digit inflation in the 1980’s.

And this increase could have additional contractionary effects on growth according to many economists.

Even though every period since 1948 of two consecutive negative quarters has coincided with a recession, they are denying that it will be arecession this time.

Everyone who cares knows that recessions happen when there are two consecutive quarters of negative growth, everyone, that is, except the Biden administration team, the people who actually want to decide when the economy is in recession.

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Old Patriot
Old Patriot
3 months ago

Also in a stagflation due to high inflation.

3 months ago

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