US economy contracts again amid fears of recession

US gross domestic product (GDP) shrank at an annual rate of 0.9% in the second quarter of 2022, according to Commerce Department estimates. It is the second straight quarter of economic contraction, one informal indicator of a recession. The estimates came a day after the Federal Reserve hiked interest rates by .75 percent for the second time this year to tame inflation, which has been at a 40-year high for several weeks now. The interest rate hikes and now the GDP numbers have spooked many analysts into forecasting a recession.Officially, the National Bureau of Economic Research declares recessions and expansions, and likely won’t make a judgment on the period in question for months if not longer. Back-to-back quarterly contractions meet one definition of a recession, although the US relies on a determination by a group of researchers at the National Bureau of Economic Research who look at a broader range of factors.

The Labor department report says that layoffs remain elevated. Initial jobless claims totaled 256,000 for the week ended July 23, a decline of 5,000 from the upwardly revised level of the previous week but higher than the Dow Jones estimate of 249,000, US President Joe Biden has said that it is no surprise that the world's largest economy is slowing down amid rising inflation. In a statement, US President accepted that the economy is slowing down but he said that they are on the right path and US will come through this transition stronger and more secure.