World GDP may decline again in second quarter, signaling possible recession
4 factors that could determine if gas prices will keep falling
Gas prices are now averaging $4.41 a gallon across the country, down from last month’s peak of more than $5 a gallon. Although gas prices have been falling for more than 30 days straight, the national average is still substantially higher than a year ago, when prices averaged $3.16 a gallon, according to AAA data. Diesel prices are also averaging $5.46 a gallon as of July 22, down from $5.81 a month ago. Rising gas prices have been a major driver of inflation. A government report released last week showed that an increase in energy prices fueled a big jump in inflation in June, when the Consumer Price Index rose 9.
Thelikely slowed to a crawl or even shrank in the second quarter, potentially signaling that a recession could be on the horizon as the Federal Reserve raises interest rates at the fastest pace in decades to cool inflation.
The Bureau of Economic Analysis will publish its preliminary estimate of second-quarter gross domestic product, the broadest measure of goods and services produced in the country, at 8:30 a.m. ET Thursday. The data is expected to show that GDP rose just 0.5% on an annualized basis, a sharp drop from the 5.7% recorded in 2021.
Some estimates are even bleaker., an up-to-date tracker monitored by the Federal Reserve Bank of Atlanta, is estimating that growth actually declined 1.2% in the period from April to June.
Walmart cuts apparel prices, says inflation forcing customers to spend on food, gas
Walmart has a surplus of apparel products due to shoppers switching focus to essentials like food and gasoline thanks to inflation, forcing the company to cut prices.The company says shoppers are focusing on essentials like food and gasoline due to skyrocketing inflation and high gas prices. The announcement comes after the company announced reduced profit projections for fiscal year 2023.
Economic output already fell over the first three months of the year, with GDP tumbling 1.6%, the worst performance since the spring of 2020, when the economy was still deep in the throes of the COVID-induced recession.
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 (NBER), which tracks downturns.
If the economy declines in the second quarter, it could meet the technical criteria for a recession, which requires a "significant decline in economic activity that is spread across the economy and that lasts more than a few months." Still, the NBER — the semi-official arbiter — may not confirm it immediately as it typically waits up to a year to call it.
Potential recession a 'worry' for Dream Hotel Group CEO as Americans could curb spending
Dream Hotel Group CEO Jay Stein noted that a potential recession is a concern, but highlighted that his hotels bounced back from the pandemic quicker than expected. Stein noted that his six hotels in Manhattan, which include the Dream Hotel downtown and in midtown, were "hit hardest" during the pandemic. He pointed out that many of his hotels were closed for about one year and reopened last May."I never thought we would bounce back this quickly," he told host Stuart Varney. "So it has been a great return.
The NBER has also stressed that it relies on more data than GDP in determining whether there's 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.
"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.
The committee does not meet regularly, only when members decide that it is warranted.
There are conflicting signs about the economy's health: the number of Americans filing for unemployment benefits has gradually increased, companies have announced layoffs or hiring freezes, and the housing market is softening. At the same time, unemployment remains near a historic low, and consumers are still spending heavily, despite scorching-hot inflation.
Politico says upcoming GDP report predicting a recession could be 'possibly inaccurate'
Politico suggested on Wednesday night that the upcoming GDP report on the last quarter could be “inaccurate” even if it reports negative growth or a recession.Anticipation for the GDP report is high because if data shows a contraction, that would be the second consecutive quarter with negative growth, which is how a recession is defined. White published an analysis of the potential news that, according to the publication’s Twitter account, could be "possibly inaccurate.
Economists widely agree the risks of a recession climbed considerably this year and that avoiding a downturn in the near future will be increasingly difficult as thetries to bring inflation under control by cooling consumer demand. Central bank policymakers raised the benchmark interest rate by 75 basis points in June and July for the first time since 1994. They signaled that another increase of that magnitude is possible in September.
Fed Chairmantold reporters that he does not believe the U.S. economy is in a recession, despite growing fears that the country's central bank could trigger a downturn with its war on inflation.
"I do not think the U.S. is currently in a recession, and the reason is there are too many areas of the economy that are performing too well," Powell said. "This is a… It doesn’t make sense that the economy would be in a recession with this kind of thing happening."
He also issued a word of caution on the unseen GDP data ahead of its release.
"do have a tendency to be revised pretty significantly," he said. "You tend to take first GDP reports with a grain of salt."
Hiking interest rates tend to create higher consumer and business loan rates, which slows the economy by forcing employers to cut back on spending. Mortgage rates are already approaching 6%, the highest since 2008, while some credit card issuers have ratcheted up their rates to 20%.
The White House is now trying to get ahead of what will likely be a dismal GDP report, downplaying the meaning of a negative figure and arguing the economy is nowhere near a recession.
"We’re not going to be in a recession," President Biden said on Monday.
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Fed Reserve Bank of Minneapolis CEO and President Neel Kashkari told CBS' "Face The Nation" Sunday that the current state of inflation is "very concerning."DIRE FED WARNING: The Federal Reserve Bank of Minneapolis CEO and President Neel Kashkari said Sunday that the current state of inflation is "very concerning" and "spreading out more broadly across the economy.