Recession

The president and his aides spoke days before the latest data on the nation's economic growth is due to be released.

As evidence that the United States has not fallen into recession, Ms. Jean-Pierre cited low unemployment, continued consumer spending and business investment. Administration officials have again and again rejected that claim, taking pains to explain the criteria that the National Bureau of Economic Research uses to determine whether an economy was in a recession. But typically, two quarters of contraction lead to a recession call. “The definition used by economists differs,” she said. “God willing, I don’t think we’re going to see a recession,” Mr. Biden said after a virtual meeting with high-tech manufacturing executives and union leaders. President Biden and his aides on Monday escalated a campaign to try to convince American voters that the nation has not fallen into recession, before the release this week of new data that could show the economy continues to shrink.

With second-quarter GDP data due out Thursday, the question of whether the economy is in recession will be on everyone's mind.

That curve has not inverted yet, but at 0.28 percentage point as of Friday's close, the curve is flatter than it's been since the early days of the Covid pandemic in March 2020. "The persistence of CPI inflation surprises clearly increases those risks, because it worsens the trade-off between growth and inflation, so it makes sense that the market has worried more about a Fed-induced recession on the back of higher core inflation prints." "The idea that the labor market is tight and the rest of the economy is strong, it's not really an argument. Weekly jobless claims recently topped 250,000 for the first time since November 2021, a potential sign that layoffs are increasing. The move, called an inverted yield curve, has been a reliable recession indicator for decades. Should inflation persist at high levels, that then will trigger the biggest recession catalyst of all, namely Federal Reserve interest rate hikes that already have totaled 1.5 percentage points in 2022 and could double before year-end. Corporate executives are warning that higher prices could cause cutbacks, including to an employment picture that has been the main bulwark for those who think a recession isn't coming. If nothing else, the economy stands at least a fair a chance of hitting the rule-of-thumb recession definition of two consecutive quarters with negative GDP readings. Futures pricing indicates the central bank then will begin cutting by the summer of 2023 — a phenomenon that wouldn't be uncommon as history shows policymakers usually start reversing course less than a year after their last move. In fact, services spending accounted for 65% of all consumer outlays in the first quarter, compared to 69% in 2019, prior to the pandemic, according to Fed data. The central bank's flexible CPI, which includes things such as vehicle prices, gasoline and jewelry, rose at a stunning 41.5% annualized pace and an 18.7% year-over-year rate. The jobs market is still pretty good, manufacturing is weakening but still expanding, and consumers still seem fairly flush with cash, if somewhat less willing to part with it these days.

We will find out this week whether we've had two straight quarters of negative GDP. But President Biden's administration isn't waiting for that to argue ...

Of course, in the interim we could see plenty on the right declare a recession themselves, with the Biden administration put in the position of arguing against it. Polls will often show people think we’re in a recession even when we don’t have the GDP numbers to back that up, including as recently as 2014. The economy already shrank in the first three months of the year, driven mainly by a drop-off in inventory purchases and the United States not exporting as many goods.But a host of other signs suggest the United States isn’t in a recession. A recent CNBC survey found that 68 percent of chief financial officers expect a recession in the first half of 2023, so they might already be making decisions accordingly on things like hiring. Plus, the official recession call will be made by a panel of experts at the National Bureau of Economic Research (NBER), and it could be a ways away. While gross domestic product (GDP) is the broadest measure of economic activity, the often-cited identification of a recession with two consecutive quarters of negative GDP growth is not an official designation. “But to be clear I don’t think that just because it hasn’t happened in recent history means if we see two consecutive quarters of negative real GDP growth then we’re clearly in a recession,” Sinclair said. “We view real GDP as the single best measure of aggregate economic activity,” the NBER said at the time. The GDP report will fuel a whole new set of questions over whether the economy is in a recession, or approaching one. By one definition, a recession is marked by two consecutive quarters of negative growth. The first thing to note is that two straight quarters of negative GDP growth isn’t determinative. And that would not only color the Biden administration’s handling of the economy — something about two-thirds of Americans already disapprove of — but it would come with just more than three months to go in the 2022 midterm elections.

President Biden said "God willing" the United States is "not coming into a recession," ahead of a looming GDP report that will likely show the economy has ...

Another data point that measures how much homeowners would pay in equivalent rent if they had not bought their home also jumped 0.7% in June from the previous month. Price increases were extensive, suggesting that inflation may not be near its peak: energy prices rose 7.5% in June from the previous month, and are up 41.6% from last year. So-called core prices, which exclude more volatile measurements of food and energy, climbed 5.9% from the previous year. Prices jumped 1.3% in the one-month period from May. Those figures were both far higher than the 8.8% headline figure and 1% monthly gain forecast by Refinitiv economists. "My hope is we go from this rapid growth to a steady growth, and so we'll see — we’ll see some coming down." "What is a recession?

Officials are gearing up for another supersized interest rate hike that's likely to send the economy and markets through convulsion, without a clear line of ...

Consumer sentiment surveys conducted by the University of Michigan and the Conference Board are unusually divergent. For example, information from card processor First Data can be used to pinpoint regional factors in the national retail sales figures, which provide insight into the strength of consumer spending — a key variable in forecasting inflation. And if you get enough pieces of information that don’t fit, then you rewrite the story.” The economy has been deeply disrupted by the pandemic, price spikes not seen in decades, unexpected supply chain snarls and Russia’s war in Ukraine. That makes the most recent data simultaneously more important and less reliable. “Where is the economy today, and what direction is it headed? That means as Fed officials gear up for another supersized interest rate hike that’s likely to send the economy and markets through convulsions, they’re doing so without a clear line of sight at their target.

President Joe Biden's administration is downplaying data due this week that could show the US economy contracted for a second straight quarter -- a ...

The colloquial definition is a sort of short-hand: two consecutive quarters of negative growth. But 20 of the 63 economists surveyed by Bloomberg currently expect a drop -- helping fuel the recession debate. They’re arguing that the current picture is complicated, with global supply shocks and fluctuating commodity prices offset by a robust labor market.

The housing market may prove to be ultimate wildcard in this economic cycle.

But if interest rates were to surge more than expected and if financial conditions were to deteriorate suddenly, the potential for a sharper downturn in real estate activity cannot be ruled out. The once red-hot housing market is finally starting to cool and, so far, despite rising mortgage rates and easing demand, the odds favor a soft landing in the real estate sector. We invite you to join the discussion on Facebook and Twitter. Declining consumer sentiment and falling real incomes also highlight the growing risk of a recession. The severity of any potential downturn will depend on the extent to which household and corporate balance sheets are negatively impacted. The third estimate of real GDP indicated that the U.S. economy shrank in the first quarter of 2022. In fact, there are signs that an economic downturn may be hard to avoid over the next 12 months as American households and businesses become increasingly fearful of fast-approaching headwinds. It is possible that incoming data initially indicate that the U.S. experienced two consecutive quarters of negative GDP growth during the first half of 2022. Some analysts even believe that the U.S. is already in a recession. While non-farm payroll data appear to indicate a still-robust labor market, household survey data suggest that labor market conditions are starting to deteriorate. A few recession indicators with a strong historical track record are worth monitoring for incipient signs of a downturn. As the U.S. economy continues to cool down, there is a growing debate over when (rather than whether) the ongoing slowdown will morph into a full-fledged recession.

There's no denying that the US economy is at a strange juncture that's left even top experts scratching their heads.

On the radar: The company's luxury Porsche unit had been on track to go public later this year in a highly-anticipated listing, though volatile markets have posed a risk. VW has said it will dole out €89 billion ($91 billion) over the next five years on developing EVs, accounting for about half of planned spending during that period. "They had the schedules months in advance." The latest Business Conditions Survey from the National Association for Business Economics released Monday found that 43% of respondents think a recession in the next 12 months is more likely than not. But investors don't love the uncertainty. The final word: One definition of a recession is when the economy experiences two consecutive quarters of negative gross domestic product. Shares fell in early trading on Monday. The big question: What does this mean for Volkswagen's ambitions? That means the recession debate is likely to persist for many months, no matter what's revealed later this week. "When we've been in this kind of situation before, recession has essentially always followed." Shares are up almost 2% in early trading. Consumers are extremely pessimistic, but they're spending more than they did last year, according to the latest retail sales data.

To many investors, this week's GDP report is more important than usual. The reason is that real GDP declined in the first quarter and might have declined ...

At present, we’re projecting net exports will add 1.0 point to real GDP growth, although a report on the trade deficit in June, which arrives on July 27, may alter that forecast. Putting it all together, we estimate real consumer spending on goods and services, combined, increased at a modest 1.2% rate, adding 0.8 points to the real GDP growth rate (1.2 times the consumption share of GDP, which is 68%, equals 0.8). A decline at a 4.0% rate would subtract 0.2 points from real GDP growth. Mortgage rates should eventually become a headwind, but, for now, it looks like an increase in spending on construction was more than accounted for by inflation in construction costs. Payrolls grew at a monthly rate of 539,000 in the first quarter and 375,000 in Q2. If we were already in a recession, none of this would have happened. (4.4 times the 14% business investment share of GDP equals 0.6). Combined, business investment looks like it grew at a 4.4% rate, which would add 0.6 points to real GDP growth. That happens in July, including with the report arriving this Thursday. Given the strength in jobs and industrial production, it wouldn’t surprise us at all if Q1 is eventually revised positive. Industrial production rose at a 4.8% annual rate in the first quarter and at a 6.2% rate in Q2. Unemployment is lower now than at the end of 2021. We think these investors are paying too much attention to the GDP numbers; the US is not in a recession, at least not yet. To many investors, this week’s GDP report is more important than usual. Home Building: Residential construction looks like it contracted at a 4.0% annual rate.

Are we heading for a recession? On this podcast episode, an economist explains why he's feeling optimistic—at least for now.

And the stock marking is dropping. The Gross National Product dropped by nearly 2% last quarter. Inflation is up 9% over last year.

Is the United States heading for a recession? Or is the economy already in one? It -- almost -- doesn't matter.

That's exactly what the central bank did after a series of rate hikes in 1999 and early 2000, just as the dot-com boom was going bust. He said most investors don't seem to be expecting a repeat of the early 1980s or another Great Recession like 2008. "Recession is not our base case. Treasury Secretary Janet Yellen said in an interview that aired Sunday on NBC's "Meet the Press" that a recession is "a broad-based contraction in the economy that affects many sectors" and added that she would be "amazed" if the NBER were to say that the economy is now in a recession. "People are preparing themselves for the fact that we are already in a recession now or that there is a high likelihood we will soon be in one," said Hady Farag, a partner and associate director at Boston Consulting Group. showed that 65% of US voters said in mid-July that they think we're in a recession....and that's compared to just 51% saying that in March 2020, the beginning of the US

The Biden administration is ramping up messaging that two quarters of negative growth do not mean a recession, bracing Americans for a likely tough economic ...

Whether the U.S. economy is slowing toward a more normal pace of growth or sliding into a recession remains to be seen. In a technical sense, the White House is correct,” said Austan Goolsbee, economics professor at the Chicago Booth School of Business who served as CEA chairman under former President Obama.Goolsbee noted that the downturn caused by the COVID-19 pandemic only lasted two months before the economy began to recover, but is still considered a recession. Whether people think that the recession began now or a few months earlier, you’re going to get a recession — at least I think — later this year or the beginning of next year.” Some of the job numbers are indicating that the job market is already beginning to cool.” “I have no idea what the technical definition of an avalanche is. Layoffs have risen steadily since the Fed began raising interest rates in March as more companies feel the strain of lower sales and tighter profit margins. But even as growth slows, the labor market is flashing signs of an economy far from hitting a recession. “Certainly, in terms of the technical definition, it’s not a recession. A special committee at NBER bases those decisions on a wide range of economic data beyond the GDP reports, including job growth and layoff data. U.S. households on the whole have powered through inflation by spending more each month on goods and services, which has helped fuel record numbers of job openings and high wage growth. “We’re not going to be in a recession, in my view. Economists say new federal data could show U.S. gross domestic product (GDP) shrinking between April and June, marking the second straight quarter of contraction.

The International Monetary Fund downgraded its growth forecasts and projected higher inflation around the world.

The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point on Wednesday as it tries to slow the economy and tame rapid inflation. In a twist, while the I.M.F. downgraded most economies, Russia’s economy is now expected to shrink 6 percent this year rather than the previously forecast 8.5 percent. And it said some indicators suggested that the United States was already in a “technical” recession, which the I.M.F. defines as two consecutive quarters of negative growth. The I.M.F. underscored that its forecasts are subject to considerable uncertainty and that more downgrades could come. In an update of the World Economic Outlook, the I.M.F. said economic prospects had darkened significantly in recent months as war in Ukraine, inflation and a resurgent pandemic inflicted pain on every continent. “God willing, I don’t think we’re going to see a recession.” Inflation is also rising more rapidly and broadly than the I.M.F. anticipated earlier this year. With central banks around the world raising interest rates to tame inflation, growth is expected to slow further next year. Put simply, the outlook for the global economy is “increasingly gloomy,” he wrote. “Domestic demand is also showing some resilience thanks to containment of the effect of the sanctions on the domestic financial sector and a lower-than-anticipated weakening of the labor market,” the I.M.F. report said. The I.MF. noted that growth in the United States had been weaker than expected in the first half of the year and that there was “significantly less momentum” in private consumption because of inflation and the expectation of higher borrowing costs. According to the report, the likelihood of a global recession is rising.

President Joe Biden and some of his top administration officials, including Treasury Secretary Janet Yellen and National Economic Council Director Brian ...

"The fact is, we are in a fundamentally different place compared to when the president took office and compared to this time a year ago," White House press secretary Jean-Pierre said during a recent briefing when asked about a Wall Street Journal poll that found 61% of the country is "generally pessimistic about people having an opportunity to achieve the American dream" due to the current economic climate. "Even following the administration's request to take 'a holistic look at the data' still indicates the economy is in recession," he said in a statement. That is something that we understand," she continued. No matter how the administration tries to slice it, the economy is in recession, and the Biden administration only has itself to blame. "Notably, there are no fixed rules or thresholds that trigger a determination of decline, although the committee does note that in recent decades, they have given more weight to real personal income less transfers and payroll employment." "Looking ahead, we know that the U.S., along with the rest of the global economy, faces significant headwinds — and little relevant data are yet available on the third quarter," CEA concludes. "I'm not saying that we will definitely avoid a recession, but I think there is a path that keeps the labor market strong and brings inflation down." Deese said in multiple interviews on Monday that the country has never experienced a recession without massive, nationwide job loss. In particular, officials are stressing to the public that though the coming report may show that gross domestic product shrank for the second consecutive quarter, the United States is not really entering a recession. I don't think we're going to see a recession." "We're not going to be in a recession, in my view," Biden himself told reporters Monday. "The unemployment rate is still one of the lowest we've had in history. My hope is we go from this rapid growth to a steady growth, and so we'll see some coming down, but I don't think we're going to, God willing.

The Treasury Secretary says the US economy is not in a recession. One of her Democratic predecessors says a recession is highly likely.

Eventually, Flynn says of Summers and Yellen, "one of them is going to be right." "You can look at the last six times that the Fed has adopted a rising interest rate environment...since 1980," Doug Flynn, certified financial planner with Flynn Zito Asset Management, told me Monday morning. Truth is, no one really knows if the economy is already in a recession or headed for one. "I think we're very unlikely to see one (a soft landing.)" It's not politicos or investment bankers who hold the key here. The national jobless rate is 3.6%

Probably. Economic output, as measured by gross domestic product, fell in the first quarter of the year. Government data due this week may show that it fell in ...

Consumer spending, for example, grew at a solid 1.8 percent annual rate in the first quarter, adjusted for inflation, and most forecasters believe it grew in the second quarter, too, albeit more slowly. The collapse in economic activity in the first months of the pandemic was so broad and so severe that the bureau declared it a recession even though it lasted only two months. By that measure, the economy grew slightly in the first quarter. He believes that the production data will eventually be revised to be closer to the income data, meaning the economy probably didn’t shrink in the first quarter at all. In the first quarter, gross domestic product fell at an annual rate of 1.6 percent, while gross domestic income grew at an annual rate of 1.8 percent. “It is sort of this race: Does the labor market crack before inflation begins to slow?” In fact, some economists think it is likely that the first-quarter data will eventually be revised to show a modest gain. Mr. Frankel served until 2019 on the Business Cycle Dating Committee of the National Bureau of Economic Research, the semiofficial arbiter of when recessions begin and end in the United States. The committee tries to be definitive, which means it typically waits as much as a year to declare that a recession has begun, long after most independent economists have reached that conclusion. The Federal Reserve is raising rates aggressively to try to tame inflation, which has already contributed to large declines in the stock market and a steep drop in home construction and sales. But it is usually clear in hindsight, which is why the dating committee waits so long to make its pronouncements. The housing market has slowed sharply, income and spending are struggling to keep pace with inflation, and a closely watched measure of layoffs has begun to creep up. Most economists still don’t think the United States meets the formal definition, which is based on a broader set of indicators, including measures of income, spending and job growth.

Fears that the U.S. economy is heading toward a recession may be realized when the government reports the latest gross domestic product data Thursday.

"What that means on the ground is that for a home seller, they're going to have less negotiating power, and a home buyer will have more," he said. On Wednesday, the Federal Reserve is expected to announce another increase in its key interest rate as it seeks to fight inflation. He notes a new, three-month high in chain-store spending reported by retail group Redbook on Monday. It's a reflection of home price gains that were outpacing household income gains, something that was ultimately not sustainable, he said. But Fratantoni said he is not yet concerned about the overall health of the U.S. economy right now. After a number of months that saw home prices appreciate by as much as 20%, the gains are now likely to slow to a crawl, to less than 3%, he said.

The International Monetary Fund downgraded its growth forecasts and projected higher inflation around the world.

As the labor market cools, even a small “shock” could tip the economy into a recession, he said. The I.M.F. underscored that its forecasts were subject to considerable uncertainty and that more downgrades could come. “The recession in the way it is defined typically is looking at more than just output, you want to take into account the strength of the labor market,” Mr. Gourinchas said. And it said some indicators suggested that the United States was already in a “technical” recession, which the I.M.F. defines as two consecutive quarters of negative growth. While the I.M.F. downgraded most economies, it projected that Russia’s would shrink less than previously expected — contracting 6 percent this year rather than the previously forecast 8.5 percent. “God willing, I don’t think we’re going to see a recession.” The international group also warned of another problem that could emerge as the Fed raises interest rates. Inflation is also rising more rapidly and broadly than the I.M.F. anticipated earlier this year. Put simply, the outlook for the global economy is “increasingly gloomy,” he wrote. The I.M.F. said that inflation in emerging markets could be amplified as the appreciation of the dollar makes the imports that they buy with their local currencies more expensive. In an update of the World Economic Outlook, the I.M.F. said economic prospects had darkened significantly in recent months as war in Ukraine, inflation and a resurgent pandemic inflicted pain on every continent. Growth is expected to slow even further next year as central banks around the world raise interest rates in an effort to tame inflation by cooling their economies.

People shop in a supermarket as inflation affected consumer prices in New York City, June 10, 2022. Andrew Kelly | Reuters. Everyone who cares knows that ...

"Were we in a recession in the first half? "The economy has never been in recession when at least three NBER indicators rose during the month," he said. "The NBER people, I respect them as serious economists. "I wouldn't be surprised if their recession start date was a little bit later," he said. The NBER did not reply to a CNBC request for comment. "If this definition feels involved, it's because it is," Tim Quinlan, senior economist at Wells Fargo, said in a client note. Its most recent call came from the Covid downturn, which it said began in February 2020 and ended two months later. The U.S. trade deficit hit a record high in March, another negative for GDP. Inventories have lagged, which also hurts growth as it is measured by the Bureau of Economic Analysis. So you could have three quarters in a row of contraction for GDP. Does that technically mean we're in a recession?" "I think it's still just a game of semantics. The bureau's economists, in fact, profess not even to utilize gross domestic product, the broadest measure of activity, as a primary barometer. To the public, though, these are just details left for economists to figure out.

In a report released Tuesday, the International Monetary Fund once again lowered its world economic forecast as it predicted major slowdowns in the three ...

The IMF has lowered its expectations for China's GDP growth this year, from 4.4% in April, likening the fallout from Russia's invasion of Ukraine to that of an "earthquake." At that point, it had predicted about 3.6% growth in both 2022 and 2023. have continued to hamper the economy, triggering a slowdown that "has been worse than anticipated," the group added. That scenario, the IMF warned, could prompt an official recession next year, causing global growth to tumble further to just 2%. That level of anemic growth has happened just five times since 1970, the IMF said. the flow of gas to Europe. That would send inflation even higher, and global growth this year down to about 2.6%, just a hair away from the hot zone, according to the IMF. The IMF now expects the world economy to grow just 3.2% this year, down from 6.1% in 2021.

The International Monetary Fund cut global growth forecasts again on Tuesday, warning that downside risks from high inflation and the Ukraine war were ...

Russia's economy is expected to contract by 6.0% in 2022 due to tightening Western financial and energy sanctions - a "fairly severe recession," Gourinchas said. It said additional fiscal support from Beijing could improve the growth outlook, but a sustained slowdown in China driven by larger-scale virus outbreaks and lockdowns would have strong spillovers. Inflation in emerging market and developing countries is now expected to reach 9.5% in 2022, up from 8.7% in April. Register now for FREE unlimited access to Reuters.com This would exacerbate inflation and embed longer-term inflationary expectations that would prompt further monetary policy tightening. The IMF cut its eurozone growth outlook for 2022 to 2.6% from 2.8% in April, reflecting inflationary spillovers from the war in Ukraine. But forecasts were cut more deeply for some countries with more exposure to the war, including Germany, which saw its 2022 growth outlook cut to 1.2% from 2.1% in April. Register now for FREE unlimited access to Reuters.com Register now for FREE unlimited access to Reuters.com For the United States, the IMF confirmed its July 12 forecasts of 2.3% growth in 2022 and an anemic 1.0% for 2023, which it previously cut twice since April on slowing demand. Under a "plausible" alternative scenario that includes a complete cut-off of Russian gas supplies to Europe by year-end and a further 30% drop in Russian oil exports, the IMF said global growth would slow to 2.6% in 2022 and 2% in 2023, with growth virtually zero in Europe and the United States next year. The IMF said it now expects the 2022 inflation rate in advanced economies to reach 6.6%, up from 5.7% in the April forecasts, adding that it would remain elevated for longer than previously anticipated. Global real GDP growth will slow to 3.2% in 2022 from a forecast of 3.6% issued in April, the IMF said in an update of its World Economic Outlook. It added that world GDP actually contracted in the second quarter due to downturns in China and Russia.

There's a pretty good chance the Bureau of Economic Analysis, which produces the numbers on gross domestic product and other macroeconomic data, ...

Even gross domestic income — a number that in principle should be literally equal to G.D.P. but is estimated using different data — isn’t telling the same story, because it didn’t decline in the first quarter. So the official definition of a recession is that it is a period that the committee has declared a recession; it’s an expert judgment call, not a formula. And right now the rule emphatically does not say that we’re in a recession. That’s partly because the G.D.P. numbers seem out of sync with many other economic indicators — part of a general picture in which economic data seem to be telling inconsistent stories. If you want to share your thoughts on an item in this week’s newsletter or on the newsletter in general, please email me at [email protected]. For example, while the Great Recession is now considered to have begun in December 2007, the dating committee didn’t make that call until December 2008. It’s possible that the people who actually decide whether we’re in a recession — more about them in a minute — will eventually declare that a recession began in the United States in the first half of this year, although that’s unlikely given other economic data. Part of the answer is that the N.B.E.R. doesn’t make recession calls in real time. Imagine, for example, an economy that suffered a severe slump for one quarter, then briefly stabilized and grew a bit, then resumed its plunge for another quarter. There’s a pretty good chance the Bureau of Economic Analysis, which produces the numbers on gross domestic product and other macroeconomic data, will declare on Thursday, preliminarily, that real G.D.P. shrank in the second quarter of 2022. A modern economy is a constantly changing thing, in which individual industries rise and fall all the time. A seminal 1913 book by the American economist Wesley Clair Mitchell is widely credited with beginning the systematic empirical study of business cycles.

On Thursday, when the government estimates the gross domestic product for the April-June period, some economists think it may show that the economy shrank for a ...

The economy’s flashing signals — slowing growth with strong hiring — have put the Fed in a tough spot. For the past two weeks, the yield on the two-year Treasury has exceeded the 10-year yield, suggesting that markets expect a recession soon. The clearest signal that a recession is under way, economists say, would be a steady rise in job losses and a surge in unemployment. The nation’s largest retailer, Walmart reduced its profit outlook and said it will have to discount more items like furniture and electronics. That gauge covers combined income from all workers, so it rises when the unemployed find a job or when existing workers receive a pay raise. In the first quarter, the average was 0.2%, suggesting that the economy expanded slightly. It did in the first three months of the year, when GDP contracted 1.6% at an annual rate. Rapid price increases, particularly for such essentials as food, gas and rent, have eroded Americans’ incomes and led to much gloomier views of the economy among consumers. The job market’s strength is a key reason why the Federal Reserve is expected to announce another hefty hike in its short-term interest rate on Wednesday, one day before the GDP report. During those same six months when the economy might have contracted, businesses and other employers added a prodigious 2.7 million jobs — more than were gained in most entire years before the pandemic. That would meet a longstanding assumption for when a recession has begun. WASHINGTON (AP) — By one common definition, the U.S. economy is on the cusp of a recession.