GDP growth stalls at 1%, fears of recession grow
Jeremy Hobson: We learned this morning that the U.S. economy grew at a meager 1 percent this past spring.
Marketplace’s Nancy Marshall Genzer joins us now, live from Washington with the details. Nancy, this is worse than we originally thought.
Nancy Marshall-Genzer: Yeah, Jeremy, unfortunately it is. The Commerce Department had earlier pegged growth for the second quarter at 1.3 percent, but the number was revised down to just 1 percent after reports of fewer exports. Also businesses stopped stockpiling things, so their inventories shrank.
Morris Davis is a University of Wisconsin economist about this, he’s former Fed economist. He’s on recession watch, and says the federal agency that determines whether we’re actually in a recession has something more to think about now.
Morris Davis: There almost certainly will be serious deliberation about calling this a recession even though output hasn’t contracted. It’s just grown extremely slowly.
And Jeremy, Davis says he actually wouldn’t be surprised if economists eventually labeled the first six months of this year as a recession. Nine of the 11 recessions since World War II have been preceded by growth of one percent or less. So now, economists are looking at the Fed. They’re looking to see what the Federal Reserve could and might do to head off a recession.
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