ISLAMABAD, July 28 (Alliance News): According to US government data, the economy contracted for the second consecutive quarter between April and June, while fears of a recession are rising just months before a special midterm election for US President Joe Biden.
According to the report of the foreign media, the US Commerce Department said that after a large decrease in the first 3 months of this year, the GDP has decreased at an annual rate of 0.9 percent in the second quarter.
The report said that the negative growth in two quarters indicates that the recession is continuing and that the slowdown in the world’s largest economy will not only have global consequences but also internal political consequences of the country.
However, US President Joe Biden is optimistic that the US economy is not headed for a contraction, but his critics are insisting the report is an economic mismanagement by the well-known veteran Democrat.
The report showed private investment in vehicles and other goods, including residential buildings, fell in the second quarter despite a fall in government spending across the board and a rise in exports, after a 1.6 percent drop in the first three months of the year.
The American economy is also facing record inflation due to the increase in the prices of goods, especially fuel, due to the shortage in supply and demand after the global epidemic Corona virus and the Russian war imposed on Ukraine.
The data shows that one of the main reasons for the inflation is the increase in the rate of government spending to 7.1 percent in the said three months, which was at the same pace in the first quarter.
However, as the labor market shows signs of slowing and the Federal Reserve raises interest rates, the economy is slowing as economists debate whether or not a recession will happen.
But it’s a major political headache for the US president, who has seen his approval ratings slide in recent months as the American public struggles to make ends meet amid rising inflation. are facing difficulties.
In recent days, his administration, led by Joe Biden, has been in denial.
He stressed the importance of the labor market on Monday, insisting, “I don’t think we’re going to be in a recession.”
He said it would be highly unusual for an economy that is still creating jobs at a rapid pace and reducing unemployment at a record pace to fall into recession.
Fed Chair Jerome Powell agreed, saying it was possible to ease price pressures without triggering a recession or a big jump in unemployment despite continuing interest rate hikes to slow the economy, though he noted that Admit that the way is narrowing.
The central bank on Wednesday announced a 75-basis-point hike in interest rates, its fourth hike this year, and stressed that it would not hesitate to make more extraordinary hikes if needed.
Fed Chair Jerome Powell said the overriding goal was to bring high inflation back to 2 percent.
“We are not trying for a recession and we don’t think we have to,” he said.