US economy slips into technical recession
The US economy contracted for a second successive quarter, signalling that the country is in a technical recession and sending a warning to other countries that they may follow suit.
The commerce department announced that gross domestic product (GDP) fell at an annual rate of 0.9% in the second quarter after falling at an annual rate of 1.6% in the first three months.
It represents a rapid reversal from the 6.9% annual increase in GDP in the final quarter of 2021 when the economy roared back from Covid shutdowns.
One brighter indicator is that despite the contraction, personal consumption grew by 1%, a slowdown compared with 1.8% in the first quarter, but still evidence of strength.
The latest figures come a day after the Federal Reserve raised interest rates by 0.75 basis points as part of an aggressive campaign to rein in inflation and could persuade policymakers to ease their hawkish approach. The Bank of England is due to make its next decision next week.
Germany is also said to be flirting with recession as inflation ticks up from 8.2% to 8.5% in July and the EU’s Economic Sentiment Indicator (ESI) for this month collapsed 4.2 points to 97.6 for the EU.
Research group GfK said German economic sentiment hit a low not seen since the start of the COVID-19 pandemic.
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