US Economy Shrinks Less Than Expected

US Economy Shrinks Less Than Expected

Thursday 25th August 2022 – 13:57 (BST)

Figures released by the US Bureau of Economic Analysis have indicated the US economy contracted at a rate of 0.6% on an annualised basis over the second quarter of 2022. This was better than the market expectation of a 0.8% fall and also above initial estimates of -0.9%

This still meant the country entered a technical recession following a first quarter contraction of 1.6%, however bullish export figures combined with an increase in travel meant the readings were higher than anticipated.

The figures come against a backdrop of interest rate increases by the Federal Reserve that has left the US base rate sitting between 2.25% and 2.5%. There have been hints by the central bank that it intends to slow the pace of recent rises as the country continues to grapple with rising inflation.

Elsewhere, US president Joe Biden has pledged to wipe up to $10,000 of student loan debt for millions of students. Although a popular move amongst young voters, analysts are concerned that this could further stoke recent inflation as borrowing increases in other areas of the economy.