US may be in recession, Atlanta Fed data show

GDP tracker indicates deeper contraction in Q2

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The Federal Reserve's key gauge for tracking U.S. economic activity currently estimates that gross domestic product shrank in the second quarter even more than in the first, increasing concerns that the country may already be in a recession. 

The latest reading from the Atlanta Federal Reserve Bank's GDPNow model, which is considered the central bank's primary tool for measuring growth in real-time, indicated July 1 that real gross domestic product shrank by 2.1% on a seasonally adjusted annual rate in Q2. 

That is a 1.1% drop from GDPNow's -1.0% reading from the day before, when the gauge went negative. The next estimate from the tracker will be released Thursday.

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While the official advance estimate of Q2 performance will not be available until the end of the month, these preliminary readings show the second consecutive quarter of negative growth in the economy after GDP contracted 1.6% in Q1. 

If further readings confirm that the economy did, indeed, shrink in Q2, the technical criteria for a recession will be met, which is defined by two consecutive quarters of negative growth. However, the National Bureau of Economic Research (NBER) is the authority that makes the official determination.

Traders work on the floor of the New York Stock Exchange NYSE in New York, the United States, June 16, 2022.  (Photo by Michael Nagle/Xinhua via Getty Images / Getty Images)

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Some economic slowdown was expected as the Federal Reserve began implementing interest rate hikes earlier in the year in an attempt to cool inflation, which reached a four-decade high in May. 

Jerome Powell, chairman of the US Federal Reserve, listens during a House Financial Services Committee hearing in Washington, D.C., U.S., on Thursday, June 23, 2022. (Photographer: Eric Lee/Bloomberg via Getty Images / Getty Images)

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The central bank's challenge is to bring down soaring prices without going too far in slowing growth, but Fed Chair Powell said last week that failing to tame inflation would be a greater risk to the economy than entering a recession.