US expected to dodge technical recession with weak second-quarter growth – FT

The Financial Times (FT) quotes a Bloomberg survey of economists to raise expectations that the US may avert technical recession during its flash readings of the Q2 Gross Domestic Product (GDP) Annualized, expected 0.4% versus -1.6% prior, scheduled for Thursday.

“The US is expected to report weak second-quarter growth on Thursday following a contraction in the first three months of the year, avoiding a so-called technical recession but still reflecting a slowdown in the economy,” said FT.

The analytical piece also mentioned that a technical recession is defined as two consecutive quarters of GDP contraction. However, the US does not use this definition and instead relies on a determination by a group of researchers at the National Bureau of Economic Research, based on a broader range of factors.

Key quotes

Weak GDP data is unlikely to change the Fed’s calculus for now, economists say. In his press conference after Wednesday’s policy meeting, chair Jay Powell said he did not believe the US was in a recession and pointed to strength in the economy, including in the labor market.

Despite the consensus forecast of 0.5 percent, several big banks including Barclays, Bank of America and UBS are betting the economy will have shrunk for a second consecutive quarter.

The Atlanta Fed’s GDPNow forecast, a dynamic estimate of real GDP growth based on the most current economic data, shows a contraction of 1.2 percent.

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