The US economy may have already entered a recession, according to Federal Reserve data

Right now, if global finance is to go by GDP data, the economy can be said to be already in a technical recession. Based on the model’s latest estimate, second-quarter 2022 growth is down -1.0% as of June 30.

This number, along with the 1.6% contraction recorded in the first quarterleads to compliance with the technical definition of Recession. As the North American country will complete two consecutive quarters with negative GDP numbers.

As central banks around the world do the same and advance their monetary policies to curb inflation, the chances of a possible global recession are increasing.

Just last week, the US central bank, the Federal Reserve, raised the benchmark interest rate by 75 basis points, the largest increase since 1994.

The Federal Reserve, which has also raised its target federal funds rate by 150 basis points so far this year, It announced this week that it will start shrinking its massive $9 trillion balance sheet.

This, like any company, means that the bank will reduce its liabilities, which, in this case, are money in circulation.

Fed Chairman Jerome Powell emphasized that his entity’s fight against inflation is the main priority,”Even with the risk of a recession“.

Speaking at the annual conference of the European Central Bank (ECB) in Portugal on Wednesday, Powell also acknowledged that the process would include “some pain“.

Leave a Reply

Your email address will not be published. Required fields are marked *