The United States of America recorded a 0.9% contraction in its gross domestic product in the second quarter of 2022. Following a 1.6% annual decline recorded in the previous quarter.
The downturn in the economy of the world is following the significant rise in the prices of goods and services; largely attributed to the global energy crisis, which had spread to other areas of the economy.
Despite the contraction, personal consumption, which gives insight into the health of the US consumer; recorded a 1% growth, compared to 1.8% growth recorded in the first quarter, but still indicates evidence of strength. It is worth noting that the contraction was driven by weaker business inventory growth.
The US Federal Reserve Chair, Jerome Powell has made it clear they are willing to risk a downturn and will keep raising interest rates until they see solid evidence that inflation is moving back towards the 2% goal.
Unlike the decision made in the previous month, the vote was unanimous as the policy-setting Federal Open Market Committee raised the policy lending rate to a range of 2.25% to 2.5%, despite starting the year near zero.