Even at second glance, it doesn’t get much nicer. Measured by gross domestic product (GDP), the US economy contracted 0.6% in the second quarter. The US Commerce Department announced this in its second assessment Thursday. The former was down 0.9% at the end of last month. Combined with minus 1.6% in the first three months, this meets a somewhat arbitrary definition of a technical stagnation.
American public opinion agrees. In polls, the majority of Americans regularly report that they have a feeling the country is in an economic reversal. Officials may differ. In the USA, the so-called National Bureau of Economic Research (NBER) judges after a delay on whether the country is actually in a recession. There is more than just GDP equivalent.
But even the latter will be viewed quite differently this year by NBER. Simply put, the GDP equation is the sum of consumption, investment, government spending and net exports (exports minus imports). The main reason behind the US GDP contraction in the second quarter was that US companies held less inventories, which is part of variable investment. In 2021, GDP was still driven by massive inventory building. Without this highly volatile component, growth would have been clearly positive again this year.
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