American gross domestic product fell 0.9% at an annualized pace for the period, according to the advance estimate.
That follows a 1.6% decline in the first quarter and was worse than the Dow Jones estimate for a gain of 0.3%.
The drop came from a broad swath of factors, including decreases in inventories, residential and nonresidential investment, and government spending.
The U.S. economy contracted for the second straight quarter from April to June, hitting a widely accepted rule of thumb for a recession, the Bureau of Economic Analysis reported Thursday.
Gross domestic product fell 0.9% at an annualized pace for the period, according to the advance estimate. That follows a 1.6% decline in the first quarter and was worse than the Dow Jones estimate for a gain of 0.3%.
Officially, the National Bureau of Economic Research declares recessions and expansions, and likely won’t make a judgment on the period in question for months if not longer…read more.
Canadians can expect to dish more dollars as the Bank of Canada forecasts another spike in inflation.
Tiff Macklem, governor at Bank of Canada, spoke to the Canadian Federation of Independent Business (CFIB) on Thursday. A transcript of this meeting reveals the anxiety-inducing forecast.
“Inflation is high sevens,” said Macklem, referring to the 7.7% spike seen in year-over-year-inflation back in June. This increase broke a 39-year-record and it looks like we’re on our way to break another.
“It’s probably going to go a little over eight,” Macklem predicted. “We know oil prices were very high in June, so I wouldn’t be surprised to see it move up.”…read more.
Royal Bank of Canada is predicting this country will likely endure a “moderate and short-lived” recession next year as the economy succumbs to the pressure brought on by stubborn inflation, higher rates, and constraints in the labour market.
“This recession will be moderate and short-lived by historical standards—and can be reversed once inflation settles enough for central banks to lower rates,” economists Nathan Janzen and Claire Fan wrote in their report Thursday.
RBC’s outlook includes back-to-back annualized contractions of half a percentage point in the middle quarters of next year, before returning to growth of 0.2 per cent in the fourth quarter of 2023.
Nonetheless, Janzen and Fan warned the Bank of Canada can’t afford to take its foot off the gas in the fight against inflation.
“Though higher rates will technically push Canada toward a contraction, the Bank of Canada now has little choice but to act. … A scenario in which Canadians believe inflation will run well past the bank’s target range of one to three per cent could upend almost three decades of exceptionally effective inflation targeting policy. It could also require much larger and more damaging interest rate hikes to re-anchor prices,” they wrote…read more.
There was little expectation going into 2022 that B.C. would be able to maintain last year’s surge of economic growth following in the wake of initial pandemic paralysis.
But the province now appears to have become a “victim of its own success,” according to TD economists who forecast growth will fall a full point to 3.8 per cent in 2022 compared with a year earlier.
“A strong recovery from the pandemic has fuelled intense labour shortages. This challenge is likely to keep the province from achieving even stronger growth this year,” Friday’s report stated.
Earlier this month the Bank of Canada hiked its overnight rate for the first time since 2018 – a vote of confidence for the strength of the economy as well as an effort to tamp down on record inflation.
Central banks across the globe slashed rates to record lows in the wake of the pandemic to inject cheap capital into the economy and keep investment flowing. But that flood of capital, coupled with unprecedented supply chain disruptions, helped drive Canada’s annual rate of inflation to 5.7 per cent as of February – a level not seen since August 1991…read more.