U.S. economy shrinks in the second quarter, GDP shows, and invites talk of recession

The numbers: The U.S. economy shrank at a annual 0.9% pace in the second quarter to mark the second decline in a row, intensifying a debate over whether the U.S has already sunk into a recession.

Gross domestic product, the scorecard of sorts for the economy, had shrunk at a 1.6% pace in the first three months of the year.

The back-to-back declines in GDP were the first since the 2007-2009 Great Recession.

A sharp drop in business investment and declining inventory levels largely accounted for the negative GDP print. Government spending also fell sharply.

The lone bright spot: Consumer spending, the main engine of the economy, rose at a 1% annual clip. But that was the smallest increase since a recovery from the pandemic got underway.

While two straight quarters of declining GDP has been commonly viewed as a recession, the group of prominent economists responsible for declaring official recessions takes a broader view that suggests the old rule of thumb does not always apply.