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US Economy Declines By 0.9 Percent In Second Quarter

US economy declines by 0.9 percent in the second quarter, the growth rate may come down further.

The US economy contracted by 0.9 percent year-on-year in the second quarter (April-June) of the current year.  This is the second consecutive quarter that the growth rate of the US economy has slowed.

According to the data released by the commerce ministry on Thursday, there was a decline of 1.6 percent in the gross domestic product (GDP) in the earlier January-March quarter.

The fall in GDP for two consecutive quarters is a sign of a slowdown. However, the figure is not permanent and is subject to change.

The figures for the decline in GDP have been released at a time when consumers and companies are affected due to rising inflation and the high cost of credit.

Last year, America’s economic growth rate was 5.7 percent. The US Federal Reserve on Wednesday raised the policy rate for the second time in a row by 0.75 percent.

US economy declines by 0.9 percent: The number of unemployed is increasing in the US.

Economists believe that GDP can be influenced by factors such as government spending or international trade.

But data on jobs, industrial production, spending, and income in the US show that the situation is not very good there. However, job growth has remained strong so far.

US employers hired more workers and raised wages in June than expected. But new claims for unemployment allowance have increased in recent weeks.

In view of this, it is believed that the number of unemployed in the US is also gradually increasing.

Fed’s measures are not having any effect.

Personal consumption data for May released earlier this month showed spending and disposable income declined on an inflation-adjusted basis.

This gave rise to several disappointing forecasts for June, the figures for which will be released on Friday. There is growing speculation that a recession is imminent.

The GDP report on Thursday showed that consumer spending grew just 1 percent in the previous quarter. Residential investment fell 14 percent.

Inflation is running more than three times the Fed’s 2 percent target.

The central bank on Wednesday raised its policy rate by three-quarters of a percentage point and indicated that there is going to be a higher rate hike.

Higher borrowing costs are expected to slow down hiring and investment. This could make already slow economic growth worse.

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