The U.S. economy shrank from April through June for a second straight quarter, contracting at a 0.9% annual pace and raising fears that the nation may be approaching a recession. The decline that the Commerce Department reported Thursday in the gross domestic product — the broadest gauge of the economy — followed a 1.6% annual drop from January through March. Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession. The GDP report for last quarter pointed to weakness across the economy. Consumer spending slowed as Americans bought fewer goods. Business investment fell. Inventories tumbled as businesses slowed their restocking of shelves, shaving 2 percentage points from GDP. Higher borrowing rates, a consequence of the Federal Reserve’s series of rate hikes, clobbered home construction, which shrank at a 14% annual rate. Government spending dropped, too. The report comes at a critical time. Consumers and businesses have been struggling under the weight of punishing inflation and higher loan costs. On Wednesday, the Fed raised its benchmark rate by a sizable three-quarters of a point for a second straight time in its push to conquer the worst inflation outbreak in four decades. The Fed is hoping to achieve a notoriously difficult “soft landing”: An economic slowdown that manages to rein in rocketing prices without triggering a recession. Apart from the United States, the global economy as a whole is also grappling with high inflation and weakening growth, especially after Russia’s invasion of Ukraine sent energy and food prices soaring. Europe, highly dependent on Russian natural gas, appears especially vulnerable to a recession. In the United States, the inflation surge and fear of a recession have eroded consumer confidence and stirred anxiety about the economy, which is sending frustratingly mixed signals. And with the November midterm elections nearing, Americans’ discontent has diminished President Joe Biden’s public approval ratings and could increase the likelihood that the Democrats will lose control of the House and Senate. Read: US economy grew at solid 3.1% rate in first quarter Fed Chair Jerome Powell and many economists have said that while the economy is showing some weakening, they doubt it’s in recession. Many of them point, in particular, to a still-robust labor market, with 11 million job openings and an uncommonly low 3.6% unemployment rate, to suggest that a recession, if one does occur, isn’t here yet. “The back-to-back contraction of GDP will feed the debate about whether the U.S. is in, or soon headed for, a recession,” said Sal Guatieri, senior economist at BMO Capital Markets. “The fact that the economy created 2.7 million payrolls in the first half of the year would seem to argue against an official recession call for now.” Still, Guatieri said, “the economy has quickly lost steam in the face of four-decade high inflation, rapidly rising borrowing costs and a general tightening in financial conditions.” In the meantime, Congress may be moving toward approving action to fight inflation under an agreement announced Wednesday by Senate Majority Leader Chuck Schumer and Sen. Joe Manchin, a West Virginia Democrat. Among other things, the measure would allow Medicare to negotiate prescription drug prices with pharmaceutical companies, and the new revenue would be used to lower costs for seniors on medications. In the wake of Thursday’s second straight negative GDP report, Biden downplayed the news, pointing to continued low unemployment and strong hiring. “Coming off of last year’s historic economic growth — and regaining all the private-sector jobs lost during the pandemic crisis — it’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation,” the president said in a statement. “But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure.” The government’s first of three estimates of GDP for the April-June quarter marked a drastic weakening from the 5.7% growth the economy achieved last year. That was the fastest calendar-year expansion since 1984, reflecting how vigorously the economy roared back from the brief but brutal pandemic recession of 2020. But since then, the combination of mounting prices and higher borrowing costs have taken a toll. The Labor Department’s consumer price index skyrocketed 9.1% in June from a year earlier, a pace not matched since 1981. And despite widespread pay raises, prices are surging faster than wages. In June, average hourly earnings, after adjusting for inflation, slid 3.6% from a year earlier, the 15th straight year-over-year drop. Americans are still spending, though more tepidly. Thursday’s report showed that consumer spending rose at a 1% annual pace from April through June, down from 1.8% in the first quarter and 2.5% in the final three months of 2021.

A whopping 63 percent of Americans rated the U.S. economy as bad, with 86 percent saying it was because of inflation, closely followed by gas prices at 82 percent, showed a new CBS News poll released on Sunday. In terms of lowering gas prices, the majority of the respondents, at 65 percent, believed that the government "can do more." Also Read: Global shares mixed with eyes on inflation, US economy In addition, "pocketbook issues -- the economy and inflation -- rank as top priorities for Americans," said the survey, noting that " (Joe) Biden continues to get low marks on handling them." Also Read: Trump addresses coronavirus' heavy impact on the US economy  

President Joe Biden is moving swiftly to dismantle Donald Trump's legacy on his first day in office, signing a series of executive actions that reverse course on immigration, climate change, racial equity and the handling of the coronavirus pandemic.

U.S. stocks are rallying to records Wednesday on encouraging earnings reports and continued optimism that new leadership in Washington will mean more support for the struggling economy.

The federal government recognised President-elect Joe Biden as the “apparent winner” of the Nov 3 election on Monday, formally starting the transition of power after President Donald Trump spent weeks testing the boundaries of American democracy. He relented after suffering yet more legal and procedural defeats in his seemingly futile effort to overturn the election with baseless claims of fraud.

President-elect Joe Biden will inherit a vulnerable economic recovery under threat from a resurgent virus, likely with a divided Congress that will hinder his ability to address the challenges.

Voters in the US presidential election faced a public health crisis and a wounded economy, but neither candidate emerged as the clear choice to handle both of those issues, according to AP Votecast.   More voters — both nationwide and in key battlegrounds — said former Vice President Joe Biden would be better able to handle the coronavirus pandemic, the top concern for about 4 in 10 voters. But President Donald Trump edged out Biden on the question of who would be better to rebuild an economy besieged by nearly 11 million job losses and small businesses staring down a bleak winter. About 3 in 10 voters nationally ranked the economy as the most pressing issue.   The question of whether the pandemic or the economy mattered more to voters was a heated debate in the campaign. Trump argued that the economy should not be a casualty of the disease and maintained, without evidence, that the nation was “rounding the turn.” Biden has warned that the economy can never fully heal unless the coronavirus is first contained and businesses can fully reopen.   A majority of voters were receptive to that argument. About 6 in 10 voters said the government’s higher priority should be limiting the spread of the coronavirus, even if it damages the economy.

President Donald Trump was focused Tuesday on addressing the devastating impact the coronavirus pandemic is having on the American economy, meeting with tourism executives and speaking on the phone with restaurant executives, retailers and suppliers.