Gross domestic product (“GDP”) fell in 1.5 percent in Q1 2022. A decline in GDP for two consecutive quarters would trigger a full-blown recession in the U.S. – something we have not witnessed since the Financial Crisis. That would make the Q2 2022 GDP report from the Department of Commerce the most-watched in a long time. The Commerce Department delivered the bad news today. GDP fell 0.9 percent in Q2:
The US economy shrank again in the last three months, unofficially signaling the start of a recession.
The commerce department announced Thursday that gross domestic product (GDP) – a broad measure of the price of goods and services – decreased 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.
The bad news will be a major blow for the Biden administration as it prepares for a tough midterm election season. White House officials have tried to tamp down talk of a recession, arguing that many parts of the economy remain strong.
The growth rate stands in marked contrast to the robust 6.9% annual increase in GDP recorded in the final quarter of 2021 when the economy roared back from Covid shutdowns.
Technically, the U.S. is officially in recession. The Biden administration will likely attempt to talk around the issue. However, dueling definitions of “recession” may not help his cause. Biden, rightfully so, has been intentionally removing stimulus from the Federal Reserve built up over the past decade. The Fed has cut quantitative easing drastically and how vowed to reduce asset purchases for the foreseeable future. Below, Trump and the GE predicted recession was here:
The Fed has also hiked interest rates dramatically, bringing rates closer to historically normalized levels. Whether rate hikes will be able to tamp down inflation, remains to be seen. Corporations have feasted on trillions in bailout packages from the Obama administration and stimulus from the fed. Corporations, acting in a mercenary manner, now control several markets and can drive up prices simply to price gauge. Such price gauging will not stop due to rate hikes or overtures from Biden.
That said, Biden and the Democrats fought hard to win the election from former president Donald Trump. Now they own the economy and the recession. A failing economy will costs some politicians their jobs. The democrats will likely attempt to distance themselves from Biden in order to save their own hides. Yeah, good luck with that.