Government revision shows economy shrank 0.6% last quarter
WASHINGTON (AP) — The U.S. economy shrank at a 0.6% annual rate from April through June, the government said Thursday in a slight upgrade from its initial estimate. It marked a second straight quarter of economic contraction, which meets one informal sign of a recession.
Most economists, though, have said they doubt the economy is in or on the verge of a recession, given that America's job market remains robust, with strong hiring, low unemployment and widespread openings. Still, inflation is near a four-decade high and is punishing consumers and businesses. And the Federal Reserve's aggressive efforts to tame inflation through steep interest rate hikes are raising the risk of an eventual recession.
In its revised estimate Thursday, the Commerce Department calculated that the nation's gross domestic product — the broadest measure of economic output — contracted last quarter, though less than the 1.6% annual decline in the January-March period. In its previous estimate for the April-June quarter, the government had estimated that the economy had shrunk at a 0.9% rate.
Consumer spending, which accounts for nearly 70% of U.S. economic activity, grew last quarter, but at a slower 1.5% annual pace, down from 1.8% from January through March.
By contrast, government spending and business investment declined. And inventories tumbled as businesses slowed their restocking of shelves, shaving 1.8 percentage points from GDP.
Rising interest rates hammered the housing market. Home construction plunged 16.2%.
In its drive to curb inflation, the Fed has raised its benchmark interest rate four times this year by increasingly large increments. By raising borrowing rates, the central bank is making it costlier to take out a mortgage or an auto or business loan. The idea is that...
