US output fell 0.9% year-on-year between April and June, when economists had forecast a 0.5% rise. The early data would meet international criteria for a recession because the first quarter also saw a contraction – 1.6%. But the country has an official recession arbiter—the National Bureau of Economic Research (NBER)—and has yet to make such a judgment. It defines a recession as “a significant decline in economic activity distributed throughout the economy, lasting more than a few months, normally visible in output, employment, real income, and other indicators.” Sky News US correspondent Mark Stone said: “There is a lot of semantics around the definition of a recession, but two quarters of negative growth is certainly not good and, by some definitions, is the start of a recession. “I have to say that the US Treasury is very cautious about calling this a recession – they say ‘wait and see’ and also point out that if it is the beginning of a recession, it is very unusual. because the jobs data in America is great right now. “The jobs that are being created right now are huge. “But compare 2022 in terms of GDP to 2021, where we saw 6.3% growth in the first quarter last year, 6.7% growth in the second quarter. “Now everything is in negative territory – worrying times, combined with extraordinary inflation.” Job growth averaged 456,7000 per month in the first half of the year, and the number of new claims for government jobless benefits fell in the week ended July 23. Use Chrome browser for more accessible video player 0:39 “This bill will reduce inflationary pressures” “We are on the right track” US President Joe Biden listed a number of economic achievements and said: “This does not sound like a recession to me. He added: “Not surprisingly, the economy is slowing as the Federal Reserve acts to reduce inflation. “We are on the right track and will come through this transition stronger and safer.” He also said a new $739 billion inflation-reduction law would lower health care costs and be an investment in energy security. It will also restore fairness to the tax code … by forcing the largest corporate nations and corporations in America to pay their fair share without new taxes on people making less than $400,000 a year.” “Experts, even some experts who have criticized my administration in the past, agree that this bill will reduce inflationary pressures on the economy,” he said. “Look, this bill is far from perfect. It’s a compromise. But it is, progress is often made, with compromises. “And the fact is, my message to Congress is this: This is the strongest bill you can pass to reduce inflation, reduce the deficit, reduce health care costs, address the climate crisis, and promote and promote energy security, continuously. reducing the burdens faced by working and middle class families. “So pass it, pass it for the American people, pass it for America.”
Analysis: Biden tells US ‘don’t panic’
Being President of the USA right now feels like a fighting game. Joe Biden lurches from one crisis to another. And as issues are resolved or eased, others arise. He had a big win Wednesday night as one of his senators finally backed his climate change proposals — a big deal for Biden. But then a tense phone call with the Chinese President first thing on Thursday. Xi Jinping told Biden not to “play with fire” on Taiwan. Gulp. The US-China relationship is by far the most important geopolitical relationship to manage, and things are not looking good. From that heartfelt phone call, President Biden came straight to the White House podium to tell the American people “don’t panic” about the economy. When is a recession not a recession? This was the next mole to be struck. Yes, the economy contracted for two consecutive quarters, but “don’t panic.” It may look like a recession, it feels like one to many, but it’s not, he said. So what about that old cliché: when America sneezes, the world catches a cold? Relevant? There is no recession yet, says Wendy Edelberg, senior economist at the Brookings Institution in Washington. But, hang in there. “What I’m really worried about, and I suspect the rest of the world is really worried about, is if the real economy is slowing in the US but inflation is still high. That’s the worst of both worlds. And it suggests darker days ahead.” . And that’s when the world gets cold? “Yeah. I mean it’s when the US is shivering under the covers with a fever and the rest of the world is worried about catching this disease.” told me. Recession or not, financial balances right now are delicate and so much depends, and at a time when things seem particularly unpredictable. He later added in a White House statement: “If you look at our labor market, consumer spending, business investment … we’re seeing signs of economic progress in the second quarter. “The best thing we can do right now is to put our economy in a better position to make the transition to steady steady growth…” Wall Street’s major indexes opened flat, but by midday (EST) the Dow Jones was up 0.69%, the S&P 500 was up 0.71% and the Nasdaq was up 0.47%. “The next few months will be critical” Rob Clarry, investment strategist at wealth manager Evelyn Partners, said the economic contraction was due to weak readings for investment, government spending and inventories, although consumer spending – an important indicator of underlying growth – held up. “The NBER is tasked with deciding this, and the indicators it tracks include real personal income minus government transfers, employment, various forms of real consumer spending and industrial production,” he said. “None of these indicators point to a recession right now. “The Federal Reserve continues to face a challenging balancing act of reducing inflation without hurting economic growth — and these data point to an increasingly narrow path to a soft landing. “The next few months will be critical to see if inflation subsides. “If it remains elevated, we will see the Fed continue to prioritize inflation over growth, which will push the US economy closer to a broader economic slowdown.”
