Biden: US not in recession despite two quarters of negative growth

JOE BIDEN has insisted the US is not in a recession after official figures showed the world’s biggest economy had shrunk in two consecutive quarters.

The US president said the downturn was “no surprise”, pinning it on waning momentum and the Federal Reserve’s efforts to curb inflation. Pointing to record low unemployment, he added: “That doesn’t sound like a recession to me.”

GDP fell at an annualised pace of 0.9pc between April and June, compounding a 1.6pc decline in the first quarter. Back-to-back periods of consecutive negative growth fit the widely accepted definition of a technical recession, though academics at the

US’S National Bureau of Economic Research will have the final say on whether the period is recorded as an official downturn.

Economists say they may not categorise it as a recession due to the strong labour market and consumer spending growth.

However, the headline figure overshadowed news that Mr Biden’s stalled economic agenda had reached a surprise breakthrough in its landmark $369bn (£303bn) climate change deal.

Mr Biden said: “There’s no doubt we expect growth to be slower than last year, the rapid clip we had, but that’s consistent with the transition to a stable, steady growth and lower inflation.”

The slowdown came as the Fed undertook a historic series of rate increases to curb inflation, which has soared to a four-decade high in the wake of the pandemic.

It was seized upon by the Republican Party ahead of midterm elections this autumn.

Mike Pompeo, the former secretary of state, said: “No matter how Joe Biden wants to define it, Americans know we’re in a recession,” he said.

Unlike most downturns, when a fall in activity is accompanied by job losses and business closures, the latest figures suggest America’s labour market is still booming. The US added around 2.7m jobs over the first half of the year.

Cracks are beginning to show, however, with major retailers such as Walmart and Target slashing their profit forecasts and tech giants such as Apple slowing hiring.

The reading stunned Wall Street, where economists had been expecting GDP to grow at 0.4pc. The slowdown is unlikely to deter the Fed from pursuing further aggressive rate increases after its 0.75 percentage point increase in its key rate on Wednesday.

0.9pc

The annualised pace of the fall in GDP between April and June, compounding a 1.6pc decline in the first quarter