WASHINGTON (NewsNation) — The U.S. economy contracted from April through June for the second consecutive quarter, contracting at an annual rate of 0.9% and raising fears the country could be on the verge of a recession.
The decline the Commerce Department reported Thursday in gross domestic product — the broadest measure of the economy — followed a 1.6% annual decline from January through March. Consecutive quarters of declining GDP are an informal, but not definitive, indicator of a recession.
The report comes at a critical time. Consumers and businesses struggled under the weight of suppressed inflation and rising borrowing costs.
On Wednesday, the Federal Reserve raised its benchmark interest rate by three-quarters of a point for the second straight time in its effort to beat the worst inflation spike in four decades. The Fed is aiming for a notoriously difficult “soft landing”: an economic slowdown that manages to rein in soaring prices without triggering a recession.
Fed Chairman Jerome Powell and many economists have said that while the economy is weakening, they doubt it is in recession. Many economists, however, point in particular to a still-robust labor market, with 11 million job openings and an unusually low unemployment rate of 3.6%, to suggest that a recession, if one occurs, is still far.
It comes as the latest NewsNation/Decision Desk HQ poll found that voters’ fears about inflation are growing, outpacing their concerns about unemployment. More than 62% of voters polled ranked inflation as their number one concern about the country, surpassing their worries about unemployment, COVID-19 and crime.
The strength of the U.S. labor market, Fed Chairman Jerome Powell said at a news conference on Wednesday, “makes you question the GDP data.”
Even so, recession risks are growing as Fed policymakers pursue an aggressive policy of rate hikes which, while they may ease in the coming months, will likely continue well into 2023. the Fed have already led to a doubling of the average rate on a 30-year fixed mortgage over the past year, to 5.5%. Home sales, which are particularly sensitive to changes in interest rates, fell.
This story is developing. Refresh for updates.
The Associated Press contributed to this report.