US economy shrinks 0.9% in April to June

Washington: The U.S. economy shrank from April through June for a second straight quarter, contracting at a 0.9 per cent annual pace and raising fears that the nation may be approaching a recession. The decline that the Commerce Department reported Thursday in the gross domestic product - the broadest gauge of the economy - followed a 1.6 per cent annual drop from January through March. Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession. The report comes at a critical time.

Consumers and businesses have been struggling under the weight of punishing inflation and higher borrowing costs. On Wednesday, the Federal Reserve raised its benchmark interest rate by a sizable three-quarters of a point for a second straight time in its push to conquer the worst inflation outbreak in four decades.

The Fed is hoping to achieve a notoriously difficult "soft landing": An economic slowdown that manages to rein in rocketing prices without triggering a recession.