US GDP shrinks 0.9% in Q2 after Q1 contraction

WASHINGTON - The US economy shrank at an annual rate of 0.9 percent in the second quarter after a 1.6-percent contraction in the previous quarter, the US Commerce Department reported Thursday.

The decrease in real gross domestic product (GDP) reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by increases in exports and personal consumption expenditures, the department's Bureau of Economic Analysis said in an "advance" estimate.

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.

Federal Reserve Chair Jerome Powell on Wednesday dismissed the view that the US economy is already in a recession, citing labor market strength.

"We're not trying to have a recession and we don't think we have to," Powell said, while acknowledging that the path to avoid recession has narrowed and may narrow further.

The latest data came one day after the Fed raised its benchmark interest rate by 75 basis points, the second in a row of that magnitude.