U.S. GDP in Q2 revised up to 0.6 pct contraction

WASHINGTON, Aug. 25 (Xinhua) -- The U.S. economy shrank at an annual rate of 0.6 percent in the second quarter of this year, up from a 0.9 percent contraction estimated a month ago, according to data released Thursday by the U.S. Commerce Department.

The update primarily reflects upward revisions to consumer spending and private inventory investment that were partly offset by a downward revision to residential fixed investment, the second estimate showed.

The decrease in real gross domestic product (GDP) reflected decreases in private inventory investment, residential fixed investment, federal government spending, and state and local government spending, that were partly offset by increases in exports and consumer spending. Imports, which are a subtraction in the calculation of GDP, increased.

With a first-quarter decline of 1.6 percent, a second consecutive quarter of negative growth would meet the technical definition of a recession.

Desmond Lachman, senior fellow at the American Enterprise Institute and a former official at the International Monetary Fund (IMF), told Xinhua earlier that the official determination as to whether the country has entered a recession is made by the National Bureau of Economic Research which they do "only after a few months' delay."

"Upward revisions to underlying demand and a first read from the income side weakens the argument that the economy is currently in recession," Jay Bryson and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis.

Real personal consumption expenditures (PCE) were revised higher by half a percentage point to an annualized rate of 1.5 percent, they said.

Bryson and Seery, however, noted that second quarter weakness still reflects "a genuine slowing" in economic activity, and "we forecast the economy will fall into a mild recession by the beginning of next year."

A National Association for Business Economics (NABE) survey released Monday showed roughly one-fifth of panelists believe the United States is already in a recession, while 47 percent expect a recession to begin by the end of 2022 or the first quarter of 2023.