Jakarta –
The United States (US) has released negative gross domestic product (GDP) figures for two consecutive quarters.
Quoted from The Hill, President Biden’s administration is trying to quell fears of a recession in the market. Biden said that the minus of economic growth in the first and second quarters of this year is normal.
But with this condition many people are wondering whether the US has entered the brink of recession? Here are two arguments that explain the current state of the US economy.
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US Economy Minus 2nd Quarter in a row
The Hill noted the minus of the US economy for two consecutive quarters signaled a recession.
However, there are indicators that are not in line with these conditions, namely the number of workers in the US which has increased.
The White House said in a statement that an economic contraction for two consecutive quarters was not the official definition of a recession.
Economy Minus 2 Times = Recession
A recession is a condition when gross domestic product (GDP) declines or when real economic growth is negative in the long term.
A country is considered to be in a recession if economic growth is below 0 for two or more quarters.
In a recession, the decline in GDP is in the range of -0.3% to -5.1%.
In the United States (US), for example, the most severe decline in GDP (-5.1%) occurred more than ten years ago, namely in December 2007-June 2009. For the lowest GDP decline at -0.3% occurred in March-November 2001.
Minus economy is not necessarily a recession
But there are also those who say that the US is not in a recession yet. Because there is a contradiction in the US economy.
Previously, the US central bank raised its benchmark interest rate to cushion the impact of inflation which touched its highest level in decades.
However, currently the employment figure remains stable and there are no visible signs of a decline.
This indicator is confusing even among economists said to call this condition a recession must be seen some indicators and accurate calculations.
An economist from the Tax Foundation in Washington, Alex Durant, said that various economic indicators must be seen to determine a country’s recession.
(kil/dna)
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