First half of the year showed the decline of the U.S. economy and the stability of the labor market

A preliminary forecast by the U.S. Department of Commerce has been confirmed. From the data, we can trace a 1.6% year-over-year decline in output in the first quarter, a 0.6% year-over-year drop in gross domestic product (GDP) in the second quarter.

Reasons for the decline in the second quarter may be a decrease in inventories and investments of companies, as well as a reduction in government spending. In addition, the reasons can include support for development by exports and consumer spending.

Negative growth for 2 quarters in a row may be a basis for economists to discuss recession. However, experts have doubts about this, as the labor market is stable. Despite this, high inflation, a sharp increase in interest rates by the Federal Reserve System and other events are severely limiting the development of the U.S. economy.

The U.S. economy has recently suffered a reduction, but the labor market in the world's largest economy has unexpectedly improved over the last week. The Labor Department provided information showing that initial claims for unemployment benefits dropped by 16,000 to 193,000. For the first time since the beginning of June, the number of applications for help has fallen below 200,000. The situation on the labor market remains stable.

Initial applications for unemployment benefits are considered to reflect the development of the U.S. labor market, but this is a short-term indicator. The economic decline has not affected the urgent need to hire workers in many companies. The monetary policy of the U.S. Federal Reserve System is strongly focused on the development of the U.S. labor market. It brought a strong labor market as an argument against a deep recession and looks for managing high inflation with a sharp increase in interest rates.