WASHINGTON: Real gross domestic product (GDP) in the US moved back to positive territory after two consecutive quarters of degrowth.
The country’s economy grew at an annual rate of 2.6 per cent in the third quarter of 2022 (July-September), taking the US out of a technical recession. A technical recession is often defined as two consecutive quarters of negative growth in the real GDP.
“The increase in real GDP reflected increases in exports, consumer spending, non-residential fixed investment, federal government spending and state and local government spending, that were partly offset by decreases in residential fixed investment and private inventory investment,” the Bureau of Economic Analysis said on Thursday.
In the January-March and April-June quarter, real GDP decreased by 1.6 per cent and 0.6 per cent, respectively, US Bureau of Economic Analysis data showed.
The GDP estimate released for the third quarter is based on source data that are incomplete or subject to further revision by the source agency and the “second” estimate for the third quarter, based on more complete data, will be released on November 30.
Earlier, on a couple of occasions, US President Joe Biden had said the country’s economy was not heading into a complete recession. “In my view, the unemployment rate is still one of the lowest we have had in the history… and we still find ourselves with people investing,” Biden had told reporters in late July.
“My hope is we go from this rapid growth to steady growth so we will see some coming down, but I don’t think we are going to…god willing, I don’t think we are going to see a recession,” Biden added.
Meanwhile, apart from degrowth, the US has also witnessed over four-decade high consumer inflation, which necessitated steep interest rate hikes by the central bank US Federal Reserve.
In the recently held monetary policy review meeting, the US Federal Reserve raised key interest rates in its continued fight against red-hot inflation. The key policy rate was increased by 75 basis points to 3.0-3.25 per cent — which was the third consecutive hike of the same magnitude.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
The US central bank seeks to achieve maximum employment and inflation at the rate of 2 per cent over the long run and it anticipates that the ongoing hikes in the target range would be appropriate.
Consumer inflation in the US though declined marginally in September to a seven-month low of 8.2 per cent from 8.3 per cent in August but was way above the 2 per cent goal. (ANI)