There are fears that the US which is the world’s largest economy is in freefall as Gross Domestic Product (GDP) in the country has fallen for the second quarter.
The US Commerce Department warned on Thursday in the second quarter that GDP fell by 0.2% which is the equivalent of an annual rate decline of 0.9%.
During the first three months of the year there was a decline of 0.4% after the 0.2%, which by definition the US are in a recession.
The US President Joe Biden that their economy is good and said that the low unemployment rate of 3.6% amid low public confidence and told reporters that the country is “not going to be in a recession.”
However, Aditya Bhave, senior economist for Bank of America, said, “We don’t think we’re in a recession just yet.
“But the bigger point here is that the underlying trend in domestic demand is weakening. You see a clear deceleration from the first quarter.”
Harvard Professor Jeffrey Frankel, who previously served on the National Bureau of Economic Research committee, said he does not believe a recession started at the beginning of the year, because there was good jobs growth.
He said, “Things have already slowed down, so I’m not saying that everything is great.
“Odds of a recession going forward are substantially higher than for a random year.”
The Professor added, “Every knowledgeable macroeconomist knows that recession in the US is not defined by a mechanical rule.
“But given the polarisation of politics, there are people who are going to be cynical about it and assume the worst.”