U.S. Recession Estimate Getting Rapidly Worse

The Atlanta Federal Reserve’s GDPNow model estimate for the annual rate of real GDP growth in the second quarter of 2022 is now down to −2.1%, having been lowered by another 1.1% in the week ending July 1. The importance of this is the pace at which the bank’s second-quarter GDP estimate is getting worse—lowered by 3.4% in three weeks—indicating the second-quarter contraction may be worse than the first quarter; and the continuing plunge of two indicators in the U.S. economy—the consumption of households, and business capital investment (connected to productivity). The Atlanta Fed economists’ release said, “After this morning’s Manufacturing ISM Report On Business from the Institute for Supply Management and the construction report from the U.S. Census Bureau, the nowcasts of second-quarter real personal consumption expenditures growth and real gross private domestic investment growth decreased from +1.7% and −13.2%, respectively, to +0.8% and −15.2%, respectively.”