A Second Drop by U.S. Real GDP ... but Still No Official Recession

Summary of the publication

Real GDP in the U.S. shrank at an annualized rate of 0.9% in the second quarter, in line with our expectations. Forecasters had called for a small gain of 0.4%.

This decline was preceded by a 1.6% drop in the first quarter. A technical recession is defined as two consecutive quarters of falling real GDP, which means the U.S. economy has technically been in a recession since the start of 2022.

That being said, the United States doesn’t use this definition to determine when an official recession begins, instead relying on a committee at the National Bureau of Economic Research. The committee looks at a wider range of factors—not just real GDP—to determine U.S. economic growth cycles. Evidently, the conditions aren’t in place to declare a recession, especially since the labour market is still showing signs of strength.