The Commerce Department said its final reading of second quarter gross domestic product data on Thursday shows the economy shrank 0.6% in the spring, indicating the start of a recession.
However, another data point known as gross domestic income, which is an alternative measure of economic growth, actually increased by 0.1% in the second quarter. Recessions are technically defined by two consecutive quarters of negative economic growth and are characterized by high unemployment, low or negative GDP growth, falling income and slowing retail sales, according to the National Bureau of Economic Research , which tracks downturns.
The NBER has stressed that it relies on more data than GDP in determining whether there is a recession, such as unemployment and consumer spending, which remained strong in the first six months of the year. It also takes into consideration the depth of any decline in economic activity.The latest downturn stems from a number of factors, including declines in private inventories, residential and nonresidential investment, and government spending at the federal, state and local levels.
Contractors on the roof of a house under construction at the Norton Commons subdivision in Louisville, Kentucky, on July 1, 2022. "Thus, real GDP could decline by relatively small amounts in two consecutive quarters without warranting the determination that a peak had occurred," the nonprofit said on its website.
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