The US economy shrunk .9% from April through June, according to federal projections released Thursday, marking the second consecutive quarter the US economy failed to grow.
By many definitions, if the projections released by the federal government hold true, the US could be starting a recession. Many economists consider two consecutive quarters where the economy does not grow as a recession.
The White House in a statement ahead of the release of Thursday’s figures pushed back on talks of a recession.
“While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle,” the White House said. “Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data—including the labor market, consumer and business spending, industrial production, and incomes. Based on these data, it is unlikely that the decline in GDP in the first quarter of this year—even if followed by another GDP decline in the second quarter—indicates a recession.”
President Joe Biden placed some of the blame on the Federal Reserve, which raised interest rates again on Wednesday.
"Coming off of last year’s historic economic growth – and regaining all the private sector jobs lost during the pandemic crisis – it’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation," Biden said. "But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure."
While the economy appears to be shrinking, the job market has remained strong. It is something Fed Chair Jerome Powell noted on Wednesday after announcing the Fed's interest rate hike.
"I do not think the US is currently in a recession," Powell said. "And the reason is, there are just too many areas in the economy that are performing, you know, too well. And of course, I would point to the labor market in particular."
The United States added 372,000 jobs in June, which held the national unemployment rate at 3.6%.