Contraction continues

The U.S. economy remained in a contraction in the second quarter, according to revised data from the federal government.

The Commerce Department reported its third and final estimate of the second quarter Gross Domestic Product (GDP) showed a decline of 0.6%, the same as its second estimate in August and in line with economists' forecasts. That followed a drop of 1.6% in the first quarter. A popular rule of thumb is two consecutive quarters of negative GDP signals a recession, although many, including Fed Chair Jerome Powell, argue the U.S. is not in one right now.

The report said the declines in GDP were mainly driven by decreases in private inventory investment, especially in retail, and losses in residential fixed investment (home buying) and government spending. Those were partially offset by increases in exports and consumer spending Imports, which subtract from GDP, were higher.

• GDI Revised Downward

Gross Domestic Income (GDI), which measures the total income that all parts of the economy generate, was revised to a gain of 0.1%, down from a rise of 1.4% in the previous estimate.

Source: Investopedia