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Significance

This meets one definition of recession: two quarter-on-quarter GDP declines. However, the official determination is more complex and includes other indicators. Although the performance of the economy is independent of anyone announcing what shape it is in, labelling helps to guide policymaking and assists an understanding of economic behaviour.

Impacts

By the time a recession may be announced months from now, shifting business patterns will already have been forcing firms to adjust.

Output, sales, employment and consumer and business sentiment will decline, raising the risk that recession fears are self-fulfilling.

The global outlook is even more uncertain; nevertheless, the IMF forecasts continuing US growth for the rest of this year and next.

Stockbuilding dragged second-quarter GDP down the most (it also fell in January-March) but this swing factor may rebound in the second half.

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