The United States economy has slowed down for the second quarter in a row according to the just released data by the Bureau of Economic Analysis.
“Real gross domestic product (GDP) decreased at an annual rate of 0.9 percent in the second quarter of 2022,” the Bureau said, further adding:
“Real GDP decreased less in the second quarter than in the first quarter, decreasing 0.9 percent after decreasing 1.6 percent.
The smaller decrease reflected an upturn in exports and a smaller decrease in federal government spending that were partly offset by larger declines in private inventory investment and state and local government spending, a slowdown in personal consumption expenditures, and downturns in nonresidential fixed investment and residential fixed investment. Imports decelerated.”
This is the first time in two years that there’s a quarter on quarter slowdown with this being mostly due to high levels of inflation at 9.1% for June.
More than half of inflation is caused by a rise of both gas and oil prices to decade high levels.
The second quarter however has also seen significant layoffs in many US companies following a crash in stocks, cryptos, and other assets.
A further increase of interest rates by another 0.75% to 2.5% on Wednesday, from zero just a few months ago, has also contributed.
The question now being whether the worst is behind us as stocks and cryptos somewhat stabilize, while both oil and gas have met significant trading resistance, suggesting any further price rises are less likely.
In addition the United States grew 1.6% in Q2 over Q2 2021 and 3.5% in Q1 of 2022. The economy therefore is still overall expanding compared to last year.
Correction: The US economy grew compared to the same quarter in 2021. The headline data from the Bureau of Economic Analysis is therefore misleading as the economy has expanded this year over last year, but slowed down in expansion quarter over quarter.