Key Federal Reserve indicator suggests U.S. is already in recession territory

A key economic indicator from the Federal Reserve suggests that the United States officially entered recession territory last month after months of crushing inflation, supply chain crises and economic turmoil. 

The Federal Reserve Bank of Atlanta's GDPNow forecasting tool said on Friday that "real GDP growth (seasonally adjusted annual rate) in the second quarter of 2022 is -1.0 percent on June 30, down from 0.3 percent on June 27."

Economists broadly define a recession as a contraction in economic activity, though different experts have different benchmarks for what constitutes a recession per se. 

Economics analyst Jeff Cox wrote at CNBC on Friday that the 1% contraction, "coupled with the first-quarter’s decline of 1.6% ... would fit the technical definition of recession."

The Atlanta Fed's GDPNow model offered a more pessimistic outlook for the next quarter following its latest assessment, claiming that "the nowcasts of second-quarter real personal consumption expenditures growth and real gross private domestic investment growth decreased from 2.7 percent and -8.1 percent, respectively, to 1.7 percent and -13.2 percent, respectively."

Experts have been warning of a perfect storm of economic chaos as inflation has wreaked havoc on spending across the economy while Federal Reserve efforts to stave off that inflation have seen interest rates spiking sharply. 

Federal Reserve Chairman Jerome Powell this week promised Americans that the Fed would "succeed in getting inflation down to 2%."

"The process is highly likely to involve some pain," he said during a panel discussion at the European Central Bank, "but the worse pain would be from failing to address this high inflation and allowing it to become persistent."