In the first half of 2022, the United States economy shrank but rebounded with 2.6 percent in gross domestic product (GDP) in the third quarter.
Economists, however, warn this rebound could mask a reality Americans have been warned about all year: a recession is still possible. The only question is: when?
High inflation, rising interest rates and a lagging GDP in the first half of 2022 told economists that the country was headed toward a recession.
The growth of GDP in the third quarter was bolstered by increases in exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending. All were offset, according to the Bureau of Economic Analysis, by decreases in residential fixed investment and private inventory investment. Imports also decreased in the third quarter.
A tell-tale sign of an impending recession is consumer spending. When Americans have income to spend on products, appliances, vehicles and clothing, the economy is fueled for growth. But in the first half of this year, Americans were worried about having money to buy gas and how to offset the impact of high inflation.
According to CNN Business, consumer confidence fell to its lowest level in October since July.
And prices are going up again, particularly in the food industry thanks to high inflation and persistent supply chain issues.
Congressman Don Beyer of Virginia is chairman of the U.S. Congress Joint Economic Committee (JEC) and released a statement of optimism Thursday.
“An even better-than-expected GDP report is a result of an economic agenda that is focused on workers, families and small businesses. Real GDP has now recovered all the losses incurred by the declines in the first and second quarters, and the pandemic imbalance between goods and services that so snarled our supply chains is normalizing,” Beyer said.
Beyer said “GDP data reflect confidence in the resilience of the U.S. economy.”
“We are seeing firms expanding their operations despite economic headwinds, as investments from the CHIPS and Science Act further support domestic production in key industries and boost manufacturing jobs around the country,” Beyer said. “Even as global inflation deprives workers and families of the full benefits of this recovery, today’s data show our economy is powering ahead.”
Beyer said that Republicans are threatening debit default and economic catastrophe to gut Social Security and Medicare while “Democrats are passing legislation to help create better-paying jobs, lower out-of-pocket costs and take on corporate interests. The American Rescue Plan paved the way for our historically fast recovery, and the Inflation Reduction Act is helping everyday workers and families keep more of their incomes while making sure the wealthy and corporations can’t evade or avoid paying what they owe.”
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Rebecca Barnabi
