US Economy Contracts Again, Sparks Recession Fears

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EKO HOT BLOG reports that the US economy has shrunk for the second quarter in a row, a milestone that in many countries would be considered an economic recession.

That is not the case in the US, which uses additional data to make that call.

But the contraction, at an annual rate of 0.9% in the three months to July, has drawn widespread attention as worries about the economy grow.

Prices for groceries, petrol and other basics are rising at the fastest pace since 1981.

As the US central bank raises borrowing costs quickly to try to cool the economy and ease price pressures, fears are rising that a recession is coming – if it has not officially started already.

Faced with sinking public confidence, US President Joe Biden has tried to make the case that the economy remains sound, noting that the unemployment rate remains at a low 3.6% and hiring has remained strong.

This week, ahead of the data from the Commerce Department, he told reporters that the economy was “not going to be in a recession”. That prompted his opponents in the Republican party to accuse the White House of trying to redefine the term.

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“White House recession ‘rebrand’ won’t reduce Americans’ suffering,” they said.

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