The Federal Reserve’s (Fed) economic measurement tool suggests that the U.S. economy is likely to experience negative growth for the second consecutive quarter, which meets the signs for a recession.
In an update released on Tuesday, the Atlanta Fed’s GDPNow tracker now shows annual growth of just 0.9% for the second quarter.
Following a 1.5% fall in the first three months of the year, the indicator shows that the economy is now on the brink of recession.
GDPNow takes indicators from current economic data and uses them to predict the direction of the economy.
Tuesday’s data, combined with other previous releases, prompted the model to downgrade what had been an estimated 1.3% growth on June 1 to a new outlook for a 0.9% expansion.
Personal consumption expenditure (PCE), a measure of consumer spending that accounts for almost 70% of gross domestic product (GDP), saw a decline to 3.7% from 4.4% previously projected.
Even so, GDPNow is not an official forecast by the Fed. Instead, it is better seen as an estimate of real GDP growth based on available economic data for the current quarter being measured. Official estimates by the US central bank are usually released later.
Discussions about a recession have escalated this year amid soaring global inflation and more aggressive monetary policy tightening from major central banks.
