After revising the first quarter GDP growth from 0.01 percent to a decline of 0.1 percent, the Bureau of Economic Analysis of the Commerce Department now reports today the revised figures show the economy declined by 2.9 percent in the first quarter of 2014. Considering the likelihood of more decline in the second quarter of this year, and that economists consider two quarters of GDP decline to be the definition of a recession, it is likely the economy will be officially considered in recession after second quarter GDP figures are released.
“Real GDP declined 2.9 percent in the first quarter, after increasing 2.6 percent in the fourth. This downturn in the percent change in real GDP primarily reflected a downturn in exports, a larger decrease in private inventory investment, a deceleration in PCE, and downturns in nonresidential fixed investment and in state and local government spending that were partly offset by an upturn in federal government spending,” the Bureau of Economic Analysis reported today.
The BEA report states the first reporting of the GDP numbers for the second quarter of this year will be released on July 30, what it calls “Gross Domestic Product: Second Quarter 2014 (Advance Estimate).” If this report shows a second straight quarter of “negative economic growth” or decline in the economy, this will mean the economy is in recession according to the definition of recession accepted by most economists.
A report by the American Enterprise Institute, titled “The US is headed for another recession in 2014,” released in August of last year predicted recession in 2014. The AEI report stated, “Four years after the end of the Great Recession, the United States economy is still struggling to get back on its feet. The Bureau of Economic Analysis has released its new real gross domestic product growth estimates. In the second quarter of 2013, the US economy grew at 1.7 per cent and its first quarter growth was revised down to 1.1 per cent from the 1.8 per cent June estimates.”
The AEI report cites another of its reports titled “Third time unlucky: Recession in 2014?” in which John. H. Makin predicts recession in 2014. The summary of the report stated, “Economic indicators and long-term business cycle patterns suggest that the United States may be in another recession by early 2014.”