WASHINGTON (AP) — The U.S. financial system shrank from April through June for a 2nd straight quarter, contracting at a .9% once-a-year pace and elevating fears that the nation may well be approaching a economic downturn.

The drop that the Commerce Office noted Thursday in the gross domestic products — the broadest gauge of the financial state — followed a 1.6% yearly fall from January by way of March. Consecutive quarters of falling GDP constitute just one casual, even though not definitive, indicator of a recession.

The report will come at a essential time. Shoppers and corporations have been having difficulties under the pounds of punishing inflation and bigger borrowing costs. On Wednesday, the Federal Reserve raised its benchmark interest price by a sizable three-quarters of a place for a next straight time in its push to conquer the worst inflation outbreak in 4 many years.

The Fed is hoping to reach a notoriously tough “tender landing”: An economic slowdown that manages to rein in rocketing costs without the need of triggering a recession.

Fed Chair Jerome Powell and several economists have stated that even though the financial system is exhibiting some weakening, they doubt it can be in economic downturn. Lots of of them position, in specific, to a even now-robust labor marketplace, with 11 million career openings and an uncommonly low 3.6% unemployment rate, to suggest that a economic downturn, if 1 does come about, is even now a methods off.