The Recession of 2022: GDP Dips 0.9%, Second Consecutive Quarterly Decline
Despite the Biden administration’s enduring efforts to change the definition of a recession and Jerome Powell’s insistence that the US is not currently in a recession, we are are still going to call a spade a spade.
Hot-off-the-press preliminary data from the Bureau of Economic Analysis shows that second quarter GDP fell 0.9%, marking the second consecutive quarterly decline in economic output. So, by official definition courtesy of the National Bureau of Economic Research and as far as financial markets are concerned, the US has, in fact, eclipsed into a recession.
Following a decline of 1.6% in the first three months of 2022, the latest GDP reading came substantially shy of the 0.5% increase forecast by economists, and albeit it was a modest improvement from the prior quarter, the data still meets the definition of a recession. Looking under the hood of Biden’s 2022 recession, we see that the decline in real GDP was the result of a drop in inventory investment, housing investment, federal government spending, and business investment, among other factors. Conversely, contributing to the increase were exports, imports (which are subtracted from the GDP calculation), and consumer spending.
Analyzing the numbers, personal consumption in the second quarter rose by a paltry 1% following an increase of 1.8%, substantially falling below estimates calling for a gain of 1.2%. Following a drop of 7.8%, real disposable income fell another 0.5%, while personal saving as a percentage of disposable income stood at 5.2%, compared to 5.6% in the first three months of the year.
In the meantime, inflation continued to gain momentum: the GDP price index was up by 8.7%, after increasing 8.2% in the previous quarter. Welcome to Biden’s and Powell’s not recession, folks.
Information for this briefing was found via the BEA and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
