Is the US in a Recession? GDP Drops for Second Consecutive Quarter
The big question on everyone's mind: Are we in a recession? Recent economic data paints a concerning picture. The U.S. economy declined by 0.9% in its gross domestic product (GDP) in Q2 2025, technically bringing the U.S. over the threshold of what constitutes a recession. This marks the second consecutive quarter of economic contraction, fueling fears and sparking debate among economists and policymakers alike.
What Does a Second Quarter of Negative GDP Growth Mean?
A common definition of a recession is two consecutive quarters of negative GDP growth. The 0.9% annualized rate of decline in U.S. gross domestic product in the second quarter followed a 1.6% drop in the first quarter. This back-to-back decline meets that technical definition, raising serious concerns about the overall health of the U.S. economy.
Deeper Dive into the Q2 GDP Numbers
The latest GDP figures weren't just slightly off; they significantly missed expectations. The reading means the world's largest U.S. GDP fell by 0.9% annualized in Q2 vs. consensus expectations of 0.3% growth. This surprise downturn underscores the challenges facing the economy and the difficulties in predicting future performance.
What's Driving the GDP Decline?
So, what factors contributed to this negative growth? The drop was largely driven by decreases in consumer spending on goods and in business and... investments. Weakening consumer demand, coupled with reduced business investment, points to underlying vulnerabilities within the economy. Factors like inflation, supply chain issues, and rising interest rates are likely playing a significant role in these declines.
Recession Debate Continues
While the technical definition of a recession has been met, debate continues about whether the U.S. is truly in a recession. Some argue that the strong labor market and other economic indicators suggest otherwise. However, the two consecutive quarters of negative GDP growth cannot be ignored and warrant close monitoring of the economic situation going forward.
What's Next?
The coming months will be crucial in determining the long-term impact of these GDP declines. Keep checking back for updates and analysis on the evolving economic landscape and potential policy responses.