With this second drop in GDP – this time 0.9 % in the second quarter – the US economy responds to the classic definition of technical recession. Some economists, as well as the Biden administration, reject the term.
Le Monde with AFP and reuters
Fears grow across the Atlantic and on international markets. The US gross domestic product (GDP) (GDP) again contracted in the second quarter, 0.9 % in annualized pace. In the first quarter, GDP had already contracted 1.6 %, according to figures published Thursday July 28 by the Commerce Department.
With this second quarterly decrease in GDP, the American economy responds to the classic definition of technical recession. But many economists, as well as the Biden administration, reject the idea of a recession and affirm that there are other more favorable indicators, such as employment; They are based in particular on the official definition of the National Office of Economic Studies (NBER).
This organization, considered as “the official referee of recessions” in the United States, defines a recession as “a significant drop in economic activity distributed throughout the economy, which lasts more than a few months , normally visible in production, employment, real income and other indicators “.
The White House rejects the idea of a recession
Employment growth in the United States was on average 456,700 jobs per month during the first half of the year, which resulted in a sharp increase in wages. Household consumption was maintained thanks to expenses in services.
Nevertheless, the risks of flexibility of the economy have increased, as evidenced by the slowdown in start -ups and housing sales, while the business climate and the confidence of households have deteriorated during the last month.
The Commerce Department specifies that the decline in GDP reflects business investment reductions and housing purchases from households. The federal government, states and local administrations have also slowed down their expenses.
The White House vigorously rejects the idea of a recession and seeks to reassure the Americans before the mid-term elections on November 8, which will decide whether the Democratic Party of President Joe Biden will keep control of the congress. Mr. Biden said that the American economy was “on the right path”. According to him, “it is not surprising that the economy slows down while the federal reserve acts to reduce inflation”.
On Wednesday, the American central bank has once again raised its key rates of 0.75 points, now located between 2.25 and 2.50 %. The American Treasury Secretary, Janet Yellen, will hold a press conference at 7:30 p.m. Paris time.