As the Federal Reserve strives to rein in the worst inflation in four decades, a closely followed gauge indicated that the U.S. economy might have contracted in the second quarter, after a decline in the previous quarter.
Some economists believed that the economy is already in a recession, as two consecutive quarters of negative economic growth meet the technical definition. Others, meanwhile, argued that a recession might come a few months later.
The U.S. economy is estimated to have shrunk at an annual rate of 1.2 percent in the second quarter, according to the Federal Reserve Bank of Atlanta's GDPNow model updated Friday. The first-quarter gross domestic product (GDP) declined by 1.6 percent.
Investment guru and Ark Invest CEO Cathie Wood is among those who said that the country is already in an economic downturn.
"We think we are in a recession," Wood said in a recent interview with CNBC. "We think a big problem out there is inventories... the increase of which I've never seen this large in my career."
According to the Institute for Supply Management (ISM), the U.S. manufacturing sector saw slower growth in June amid continued supply chain bottlenecks and an elevated inflation, with the Purchasing Managers' Index (PMI) standing at 53 percent, down 3.1 percentage points from the May reading.
"We are hearing from customers that their inventories are high, and sales are coming down. We expect orders to decline in the coming months until inventories are leveled properly against demand," said a business executive from the Apparel, Leather & Allied Products industry.
