Crypto Market Rally Continues As US GDP Falls for Second Successive Quarter

The US Bureau of Economic Analysis (BEA) released its advance estimate of the US Gross Domestic Product (GDP) for Q2 2022. As per the BEA news release, the real Gross Domestic Product decreased at an annual rate of 0.9% in Q2 2022 compared to 1.6% in Q1 2022.

The BEA news release further stated that: “the decrease in real GDP reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by increases in exports and personal consumption expenditures (PCE)”. The increase in imports was attributed to an increase in services, led by travel.

The BEA also reported that current‑dollar GDP increased 7.8% at an annual rate, or US$465.1 billion, in Q2 2022 to US$24.85 trillion compared to a GDP increase of 6.6%, or US$383.9 billion in Q1 2022.  The personal saving rate for Q2 2022 was 5.2% compared to 5.6% in Q1 2022. The BEA’s second estimate for the Q2 2022 GDP will be released on August 25, 2022.

Although inflation was at a record high of 9.1% in June, the US economy added 372,000 jobs, and the unemployment rate remained at a low of 3.6%. According to US Treasury Secretary Janet Yellen, although the US economy faces numerous risks on the horizon, many of them global, it remains resilient.

Yellen, however, acknowledged a slowdown in the growth of the US economy. Opinion remains divided amongst economists as to whether the US economy is technically in a recession following two successive quarters of shrinking GDP.

Cryptocurrencies have continued their rally following July 27, 2022, US Fed’s benchmark interest rate hike of 0.75% and the Q2 2022 US GDP data. As per CoinGecko data Bitcoin, Ethereum, XRP, Cardano, Solana, and Polkadot are all trading up in the past 24 hours. Over the past two days, the global cryptocurrency market cap has risen from about US$1.0 trillion to US$1.15 trillion at the time of writing.

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