Country falls 0.9% in the second quarter

Understand the reason for the fall in the United States GDP in the second quarter of 20220 and check the possible consequences of this

Estimated reading time: 3 minutes

The GDP (Gross Domestic Product) of the United States had its 2nd consecutive quarterly decline, which indicates that the world’s largest economy has entered a technical recession. The drop was 0.9% compared to the first quarter, according to an estimate from the BEA (Bureau of Economic Analysis).

Thus, the second consecutive quarterly decline indicates that the US economy has entered a technical recession, and the retraction takes place in the midst of tightening monetary policy to curb inflation.

However, the US National Bureau of Statistics defined this recession as a significant drop in economic activity lasting more than a few months, visible in jobs, production and real income.

Thus, the result was lower than expected by the Refinitiv consensus, that is, a rise of 0.5%. In the first quarter, the result was also different from what was expected by the market, which had a high of 1.1%.

However, after the release of this indicator, the dollar futures and the commercial dollar fell and the Ibovespa futures expanded the decline. As a result, future Brazilian interest rates also fell.

What are the impacts of the fall in GDP?

According to the BEA, the US Department of Commerce related body, this second-quarter drop reflects an increase in exports and a smaller reduction in Federal Government spending.

In addition, this drop reflected in the decrease in private investment in stock, in Federal Government, state and municipal government spending, in residential and non-residential fixed investment.

But, despite the negative sides, this retraction was partially offset by the growth of exports and personal consumption expenses.

Methodology for measuring GDP

First, the BEA notes that the first estimate was based on source data that is incomplete or subject to further review. The second estimate will take place on August 25, and will be based on more complete data.

Thus, the methodology used by BEA to measure GDP is different from those used by other countries in the world. That is, the North American method is to calculate the quarterly variation with annualized seasonal adjustment, and raise the resulting variation to the fourth power.

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Image: Ronnie Chua / shutterstock.com

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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