The gross domestic product (GDP) of the United States fell 1.5% in the first quarter of this year. If this second quarter also fell, there would be a technical recession (two consecutive quarters of contraction). Doesn’t look like it’s going to be like that, but the latest macro data known on the other side of the Atlantic do anticipate a new contraction in GDP in the third quarter, making the possibility of a recession at the end of the year (with GDP falling between July and September and between October and December) more real. A situation similar to the one already anticipated by the markets in Europe.

Specifically, it has just been discovered that private activity in the US has suffered a sharp slowdown this month. This is shown by the composite PMI index, prepared by S&P Global. In this indicator, more than 50 points indicates expansion of the economy and less, contraction. In the advance data for June it has remained at 51.2, the lowest figure in five months and practically on the edge of negative ground.

“The pace of US economic growth has slowed sharply in June, with deteriorating leading indicators setting the stage for an economic contraction in the third quarter,” said Chris Williamson, chief economist at S&P Global.

“Having enjoyed a mini-boom of returning consumers following the relaxation of pandemic restrictions, many service companies are now seeing households suffer from rising costs of living, and manufacturers of non-essential goods , with a similar decrease in orders”, explains this expert.

Thus, the flash manufacturing PMI sub-index for June fell to 52.4 points compared to 57 in May. The data is the worst in 24 months. It has been affected, mainly, by the drop in production recorded by the sector. According to S&P Global Market Intelligence, it is the third worst decline in the historical series. It is second only to the numbers from the 2020 pandemic and the 2008 financial crisis. Weak demand is hitting US factories. Orders fall to July 2020 lows and sales fall back to May 2020 levels.

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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