Commerce: Economy shrank 0.6% last quarter

WASHINGTON — The U.S. economy shrank at a 0.6% annual rate from April through June, the government said Thursday in an upgrade from its initial estimate. It marked a second straight quarter of economic contraction, which meets one informal sign of a recession.

Most economists, though, have said they doubt the economy is in or on the verge of a recession, given that America’s job market remains robust, with strong hiring, low unemployment and widespread openings. Still, inflation is near a four-decade high and is punishing consumers and businesses. And the Federal Reserve’s aggressive efforts to tame inflation through steep interest rate hikes are raising the risk of an eventual recession.

In its revised estimate Thursday, the Commerce Department calculated that the nation’s gross domestic product — the broadest measure of economic output — contracted last quarter, though less than the 1.6% annual decline in the January-March period. In its previous estimate for the AprilJune quarter, the government had estimated that the economy had shrunk at a 0.9% rate.

Consumer spending, which accounts for nearly 70% of U.S. economic activity, grew at a 1.5% annual pace last quarter, faster than Commerce initially estimated but down from 1.8% from January through March.

By contrast, government spending and business investment declined. And inventories tumbled as businesses slowed their restocking of shelves, shaving 1.8 percentage points from GDP.

Rising interest rates hammered the housing market. Home construction plunged 16.2% in July, its lowest point since early last year.