It’s official: We’re in a recession. But it could have been worse.
On Thursday, the U.S. Bureau of Economic Analysis revealed that the U.S. gross domestic product (GDP) shrank another 0.9% in the second quarter of 2022. This follows negative GDP growth of -1.6% in Q1 of 2022. While it’s always a blow to see the economy shriveling, we can take consolation in the fact that it seems to have shrunk less slowly than it did in Q1 (at least for now, but revisions often paint a fuller picture).
When two straight quarters of GDP contraction occur, the country is officially in a recession. However, PJ Media’s own Vodkapundit broke the story last week that the Biden administration, in an effort to get out in front of today’s poor economic news, took the liberty of redefining “recession.”
The news comes on the heels of the Federal Reserve’s move Wednesday to hike interest rates for the fourth time this year — the second consecutive increase of 0.75% — as central planners attempt to grapple with galloping inflation. Interest rate hikes make money more expensive to borrow and more valuable to save, which tightens the dollars in circulation and helps bring down inflation. But this measure comes at the cost of cooling the economy and commonly drags growth into negative numbers.
The Fed meets again in September to decide if and how much to hike rates again. “As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation,” said Fed Chair Jerome Powell.
GDP is “the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health,” as defined by Investopedia.