CNBC’s Rick Santelli on GDP ‘Recession’ Surprise Drop: ‘Oh My God’
A CNBC analyst’s reaction to the surprise news that the country’s gross domestic product shrank 0.9% went viral on Thursday, with the dismal numbers confirming that the United States is now in a recession, as commonly defined. used by economists.
“Oh my God,” CNBC analyst Rick Santelli said, struggling to collect his thoughts in the moments after the surprisingly weak GDP data was released early Thursday.
“Not only was I wrong, down nine tenths of 1% on first look at second quarter GDP – down nine tenths of 1%.”
“OK, I know there’s an organization that decides whether we’re in a recession or not, but investors aren’t going to wait,” he said.
“Two consecutive negative quarters is not good, call it what you want.”
The Commerce Department reported Thursday that the US economy contracted 0.9%, surprising analysts who had forecast modest growth of 0.3%.
In the last quarter, the country’s GDP fell by 1.6%.
There appears to be little immediate relief in sight as consumers are burdened with record levels of inflation and high gasoline prices.
The Commerce Department released data on Friday showing that a closely watched Federal Reserve inflation indicator rose 6.8% in June, the biggest increase in four decades.
The GDP report – seen as the broadest indication of the performance of the US economy – was released a day after the Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point to the second consecutive month to calm inflation, which reached 9.1% in June.
The Fed’s sharp rate hikes have raised concerns about its ability to stage a “soft landing” by controlling inflation without causing an economic slowdown.
Despite the fact that a decline in GDP for two consecutive quarters meets the definition of a recession, Treasury Secretary Janet Yellen has firmly maintained that the economy is not in recession.
Yellen said pundits “should avoid a semantic battle” when discussing the US economy, even as the White House on Thursday rushed to push back against the widely held view among economists that two straight quarters of decline in GDP are the definition of a recession.
“Most economists and most Americans have a similar definition of a recession — substantial job losses and massive layoffs, business closures, a huge slowdown in private sector activity, family budgets under pressure,” he said. Yellen at a press conference Thursday afternoon.
“In short, a general weakening of our economy. That’s not what we see right now when you look at the economy,” she added.
“Job creation continues; household finances remain strong. Consumers spend and businesses grow.
Additional reporting by Thomas Barrabi