One Gauge Sees 0% GDP Growth in Second Quarter

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That’s how much U.S. gross domestic product will grow in the second quarter, according to one model, suggesting that the Federal Reserve is trying to slow an economy that’s already at a standstill. 

The Atlanta Fed’s GDPNow tracker, a running estimate of annualized GDP growth based on economic data, shows a drop from the 0.9% growth it indicated just last week. The change to 0% followed new reports of declining private investment and government spending. If the tracker holds true, it would be the second quarter in a row that the economy failed to grow after an unexpected decrease of 1.5% in the first quarter, according to revised data from the Bureau of Economic Analysis.

A slowdown in GDP, a measure of the economy’s total economic output, would indicate the economy is getting closer to a recession, economists said. The risk of recession—and the job losses that typically come with it—have mounted recently as the Federal Reserve embarked on a campaign to fight inflation by hiking its benchmark interest rate, aiming to slow economic activity and give supply and demand some breathing room to rebalance.

The Fed increased its benchmark rate by 0.75 percentage points Wednesday, its biggest hike since 1994.

To be sure, the Atlanta Fed tracker is more pessimistic than some other forecasts predicting solid economic growth in the second quarter.

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Article Sources

  1. Federal Reserve Bank of Atlanta. “GDPNow - Federal Reserve Bank of Atlanta.”