US GDP revision shows mild economy contraction in second quarter

Fed chairman Jerome Powell expected to address inflation concerns at Jackson Hole Symposium

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  Federal Reserve chairman Jerome Powell's remarks are to be livestreamed from the annual Jackson Hole Economic Policy Symposium. Reuters

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  Philadelphia Federal Reserve Bank President Patrick Harker, left, speaks with CNBC's Steve Liesman in an interview ahead of the annual Federal Reserve Bank of Kansas City's Economic Policy Symposium, at Jackson Hole, Wyoming. Reuters

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  Ash Hermanowski, food access and operations manager of the Jackson Cupboard in Jackson Hole, hands out meals from a garage after the nonprofit's location flooded. AP

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  High inflation, soaring home prices and financial inequality are all too visible in the idyllic mountain setting where the economic conference takes place. AP

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  Esther George, president and chief executive officer of the Federal Reserve Bank of Kansas City, gives an interview at the Jackson Hole Economic Symposium Bloomberg

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  Pierre-Olivier Gourinchas, professor of economics at the University of California-Berkeley, at the 2019 summit. Reuters

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  Janet Yellen, at the time chairwoman of board of governors of the Federal Reserve System and Mario Draghi, at the time president of the European Central Bank, at Jackson Hole in 2017. Bloomberg

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  Mark Carney, left, at the time governor of the Bank of England, and Federal Reserve chairman Jerome Powell, at the 2019 Jackson Hole gathering. AP

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  Former US Federal Reserve chairman Ben Bernanke, right, and Jean-Claude Trichet, former president of the European Central Bank, at a previous summit. AP

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  Former Federal Reserve vice chairman Richard Clarida at the 2019 Jackson Hole symposium. Reuters

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  With upscale ski resorts, campsites and ranches Jackson Hole is popular with outdoor enthusiasts. Bloomberg

The US economy shrank at a 0.6 per cent rate in the second quarter of 2022, a more moderate pace than initially thought but still marking a second straight quarter of negative growth.

While the figure does meet one of the informal signs of a recession, President Joe Biden's administration has fought back against such a notion, pointing to the strong labour market and low unemployment.

Still, inflation is at a four-decade high and the Federal Reserve's aggressive actions to curtail it raise the risk of an eventual recession.

Consumer spending grew at a 1.5 per cent year-on-year pace last quarter, faster than initially estimated but still down from 1.8 per cent from January through March.

Consumer spending, which accounts for nearly 70 per cent of US economic activity, grew at a 1.5 per cent annual pace last quarter, faster than the Department of Commerce initially estimated, but down from 1.8 per cent from January through March.

The Federal Reserve has raised its interest rate four times in 2022 in its effort to curb inflation, making it costlier to take out a mortgage or a loan.

Fed chairman Jerome Powell said the central bank is hoping to achieve a “soft landing” by driving down inflation without plunging the economy into a recession.

But Americans' pessimism in the economy is growing. Consumer confidence in July dipped to its lowest level since February 2021, data from the Consumer Confidence Index showed.

And a Monmouth University poll the same month showed that economic issued remained the largest problem facing American families. Sixty-three per cent of respondents listed inflation, petrol prices, the economy or everyday bills as their biggest concern.

Powell the centre of attention at Jackson Hole Symposium

The title of this year's event at the Federal Reserve Bank of Kansas City’s Economic Policy Symposium in Jackson Hole, Wyoming — which is returning to an in-person format this year — is titled Reassessing Constraints on the Economy and Policy.

Mr Powell's keynote address on Friday morning at the wilderness lodge could provide more information on his hopes to achieve a soft landing.

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  A neon cowboy sign on the roof of a popular bar in Jackson, Wyoming. Willy Lowry / The National

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  The Cowboy Bar in Jackson, Wyoming, a liberal enclave too small to carry Republican Congressional candidate Liz Cheney to victory in the party's primaries. Willy Lowry / The National

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  People walk past high-end shops in Jackson, Wyoming. Willy Lowry / The National

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  Snow King, a small ski hill rises behind the town of Jackson, which is famous for nearby ski-resort Jackson Hole. Willy Lowry / The National

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  A home outside of Jackson, Wyoming. The medium house price in Jackson was $2.9 million in 2021. Willy Lowry / The National

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  Traffic along Broadway Avenue in Jackson. Willy Lowry / The National

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  A home outside Jackson, Wyoming. The medium house price in Jackson was $2.9 million in 2021. Willy Lowry / The National

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  A sparsely covered hill outside the town. Willy Lowry / The National

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  A house outside of Jackson, Wyoming. The medium house price in Jackson was $2.9 million in 2021. Willy Lowry / The National

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  The back of Cody Cottier's 1999 Ford Ranger pick up track has been converted into his sleeping space. Photo: Cody Cottier

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  The truck, where Mr Cottier spends his summers. Photo: Cody Cottier

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  The National Elk Refuge, outside the town of Jackson. Willy Lowry / The National

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  The conservation area was created in 1912 to protect habitat and provide sanctuary for one of the largest elk herds. Willy Lowry / The National

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  People take pictures at Grand Teton National Park, outside Jackson. Willy Lowry / The National

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  Jackson Hole, one the most famous ski resorts in the US, is 10 minutes from the centre of Jackson. Willy Lowry / The National

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  Shoshone National Forest, one of several national parks and forests in Wyoming. Willy Lowry / The National

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  The Grand Teton mountain range rises above Jackson, Wyoming. Willy Lowry / The National

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  A river runs through Shoshone National Forest. Willy Lowry / The National

By raising its rates even as the nation's economy has slowed, the Fed has increased the risk of a downturn.

The Fed could raise interest rates by an additional 50 to 75 basis points when they next meet in September. Mr Powell is unlikely to provide a clue on which direction the Fed will take.

Investors have dropped expectations that the US central bank could shift to a slower pace of rate hikes as inflation remains at 8.5 per cent on an annual basis, but Mr Powell's remarks on Friday will be studied for any signal that a downturn could alter the Fed's strategy.

He is expected to reiterate that the Fed remains strongly committed to take all action necessary in the form of interest rates to curb inflation. He could also confirm that the Fed will keep its interest rates in place into the coming year once it finishes raising them.

“It's all treading water until we get a hold on what Fed chief Powell has to say at Jackson Hole,” John Hardy, Saxo Bank's head of FX strategy, told Reuters.