Atlanta Fed GDP Tracker Shows The U.S. Economy Is Likely In A Recession

• A Federal Reserve tracker of economic growth is pointing to an increased chance that the U.S. economy has entered a recession. Most Wall Street economists have been pointing to an increased chance of negative growth ahead, but figure it won’t come until at least 2023. 
• However, the Atlanta Fed’s GDPNow measure, which tracks economic data in real time and adjusts continuously, sees second-quarter output contracting by 1%. Coupled with the first-quarter’s decline of 1.6%, that would fit the technical definition of recession. 
• “GDPNow has a strong track record, and the closer we get to July 28th’s release [of the initial Q2 GDP estimate] the more accurate it becomes,” wrote Nicholas Colas, co-founder of DataTrek Research. 
• The tracker took a fairly precipitous fall from its last estimate of 0.3% growth on June 27. Data this week showing further weakness in consumer spending and inflation-adjusted domestic investment prompted the cut that put the April-through-June period into negative territory. 
• One big change in the quarter has been rising interest rates. In an effort to curb surging inflation, the Fed has jacked up its benchmark borrowing rate by 1.5 percentage points since March, with more increases likely to come through the remainder of the year and perhaps into 2023. 
• Fed officials have expressed optimism that they’ll be able to tame inflation without sending the economy into recession. However, Chair Jerome Powell at a panel discussion presented by the European Union earlier this week said getting inflation down is the paramount job now.

(Source: Reuters)