World’s Biggest Economy Shrinks After Been Hit By Inflation

  • Recession Bites Deep, As Inflation Hammers World’s Biggest Economy

President of United States of America, Joe Biden, has announced that the insisted that the United States of America, is not in a recession despite official figures showing the world’s biggest economy had shrunk in two consecutive quarters.

President said the downturn was “no surprise”, pinning it on waning momentum and the Federal Reserve’s efforts to curb inflation. But pointing to record low unemployment, he added: “That doesn’t sound like a recession to me.”

Read Also: Femi Adebayo Bags Another Endorsement Deal

President of the United states of America, Joe Biden

GDP fell at an annualised pace of 0.9pc between April and June, compounding a 1.6pc decline in the first quarter.

Back-to-back periods of consecutive negative growth fit the widely-accepted definition of a technical recession, though academics at the US’s National Bureau of Economic Research will have the final say as to whether the period is recorded as an official downturn.

Economists say they may not categorise it as a recession due to the strong labour market and consumer spending growth.

However, the headline figure overshadowed news that Mr Biden’s stalled economic agenda had reached a surprise breakthrough in its landmark $369bn (£303bn) climate change deal.

Mr Biden said: “There’s no doubt we expect growth to be slower than last year, the rapid clip we had, but that’s consistent with the transition to a stable, steady growth and lower inflation.

“If you look at our job market, consumer spending, business investment, we see signs of economic progress in the second quarter as well.”

The slowdown came as the Fed undertook a historic series of rate increases to curb inflation, which has soared to a four-decade high in the wake of the pandemic.

It was seized upon by the US Republican Party to criticise Mr Biden’s handling of the economy ahead of midterm elections this autumn.

Read Also: AGN Raises Alarm As Two Nollywood Actors Reportedly Missing

World's Biggest Economy Shrinks After Been Hit By Inflation

Mike Pompeo, the former secretary of state, was among those criticising Mr Biden. “No matter how Joe Biden wants to define it, Americans know we’re in a recession,” he said.

A contraction in the world’s biggest economy will have severe consequences for other countries due to the global influence of the US consumer, although the nature of the fall in output was extremely unusual.

Meanwhile, consumer confidence has declined to levels last seen at the depths of the financial crisis. European household views on their future finances are at the most pessimistic on record.

Manufacturing and services firms also suffered “significant” deteriorations in sentiment as industrial production expectations slumped to a 20-month low.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.