US GDP decreased less than expected, though the economy is still in decline

The new data obtained on Thursday from the US Bureau of Economic Analysis showed that an economic slowdown in the second quarter was actually less than it had been forecasted earlier.

The main tool for evaluating economic activity is the country’s gross domestic product, which fell by 0.6% in the second quarter. This result is better than the predicted one, as in June the fall by 0.9% was forecasted.

According to the latest data, GDP was updated with taking into consideration a small rise in the levels of consumer spending and private inventory investments. 

Nevertheless, the data signals the continuing decline of the country’s economy, which has been going on for two quarters in a row. The last fact is an unofficial recession indicator, with a group of economists from the National Bureau of Economic Research being the official arbiter on the issue.

In the view of many economists, the current economic situation in the U.S. doesn’t imply a recession. They backed this statement with such facts as a lack of weakening in the labor market, large volumes of spending in both consumer and business areas, and high levels of production and income. It’s also worth noting that an alternative measuring tool of economic activity, gross domestic income, has risen by 1.4% during the year.

Such a fact as a decrease in unemployment filing was separately registered on Thursday. The number of filings for unemployment benefits was less than a week before, according to the information received from the Department of Labor.

Over the past few months, a series of measures have been undertaken to curb the inflation and slow the demand, with the main ones being several interest rate hikes. On Friday morning, the attention will be focused on the Fed chair Jerome Powell’s speech, which is expected to take place during the annual Economic Symposium at Jackson Hole.

The data received on Thursday is the second report estimating quarterly GDP. There are three such reports, and the third one, with the updated and more precise information, will be released in September. The revised estimation is also likely to show more positive results than it was forecasted before.

Nevertheless, the economic decline is still there, as well as a 45% probability of recession. Still, according to the PNC baseline forecast, a significantly weakened growth and a slowing inflation are expected over the next years.