A key measure of economic output continued to grow last spring, easing fears that the USA is entering a recession, but adding to confusion concerning the state of the economy.
Gross domestic income, adjusted for inflation, rose 0.3 percent within the second quarter, the Commerce Department said Thursday. That was down from 0.5 percent growth in the primary quarter. The rise within the second quarter was the equivalent of a 1.4 percent annual growth rate.
The continued growth in gross domestic income is an encouraging sign for the economy, but additionally perplexing because a better-known measure of economic output, gross domestic product, has declined for the past two quarters.
The Commerce Department on Thursday said that G.D.P., adjusted for inflation, fell 0.1 percent within the second quarter. That represented a modest upward revision from the federal government’s preliminary estimate last month, which showed G.D.P. falling 0.2 percent. (The numbers shall be revised again next month.)
The conflicting signals are a mystery since the two measures, in theory, ought to be equivalent. They measure the identical thing, economic output, from opposite sides of the ledger: One person’s spending is another person’s income. In practice, the 2 indicators don’t at all times match because the federal government can’t measure the economy perfectly, but they’ve rarely diverged this much for this long.
The divergence matters because each numbers can’t be right, and a few economists consider the figure on income is prone to be closer to the mark, because the federal government collects more detailed data on income. Each the Bureau of Economic Evaluation, which produces the numbers, and the National Bureau of Economic Research — the semiofficial arbiter of when recessions begin and end in the USA — recommend a median of the 2 indicators. By that measure, economic output grew in each the primary and second quarters, and growth actually accelerated somewhat within the spring. Diane Swonk, chief economist for the accounting firm KPMG, said the story being told by the income measure is more consistent with other data showing continued strong job growth and solid consumer spending. Those indicators, taken together, show an economy that remains to be growing, but more slowly than it did last yr. At the identical time, high inflation makes people feel like they’re losing ground.
“We weren’t in a recession from an economists’ standpoint, but that doesn’t really matter,” Ms. Swonk said. “It felt like a recession to so many individuals in the primary half of the yr.”