Closing post
Our US Politics Live blog is tracking the latest developments, including the GDP report:
So here’s a reminder of today’s main stories, including the US economy shrinking for the second quarter in a row:
The threat of industrial action at the UK’s biggest container port, adding to trade problems:
Anger over the surge in profits posted by energy giants Shell and Centrica, as UK households face soaring bills and potential shortages this winter:
Plus:
The (technical) recession in the US might continue in 2022, fears Professor Costas Milas of the Management School at University of Liverpool.
He tells us that US growth might become very anaemic for the next two years or so, due to monetary policy tightening (which president Biden pointed to earlier).
Between April and July 2022, the Fed raised its main interest rate by 2 percentage points in total. Recent academic research finds that such a cumulative hike is expected to reduce GDP in the US by 1.4% within two years.
However, there are spill-over effects to the rest of the world. In fact, this very monetary tightening in the US is expected to reduce GDP in advanced economies (including the UK, of course ) by 1% within three years.
Bank of England’s MPC members should take these effects into consideration when they decide on UK interest rates in early August.
