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WASHINGTON (AP) — The U.S. economy has contracted for two straight quarters, intensifying fears that the nation is on the cusp of a recession — if not already in one — barely two years after the pandemic recession officially ended.

Six months of contraction is a long-held informal definition of a recession. Yet nothing is simple in the post-pandemic economy. Its direction has confounded Federal Reserve policymakers and many private economists since growth screeched to a halt in March 2020 as COVID-19 struck and 20 million Americans were suddenly thrown out of work.

One sector of the economy that has remained defiantly buoyant is the jobs market and on Friday, the Labor Department will release monthly employment data that most economists believe will show that hiring, too, has begun to cool.

That would be a sizeable shift in an era that may be remembered for having so many unfilled jobs that there were two available for every American who didn’t have one.

Even as the economy shrank over the first half of this year, employers added 2.7 million jobs — more than in most entire years before the pandemic struck. And the unemployment rate has sunk to 3.6%, near a half-century low. Robust hiring and exceedingly low unemployment aren’t consistent with a recession.

While most economists — and Fed Chair Jerome Powell — have said they don’t think the economy is in recession, many increasingly expect an economic downturn to begin later this year or next.

Either way, with inflation raging at its highest level in four decades, Americans’ purchasing power is eroding. The pain is being felt disproportionately by lower-income and Black and Hispanic households, many of whom are struggling to pay for higher-cost essentials like food, gas and rent. Compounding those pressures, the Fed is jacking up interest rates at the fastest pace since the early 1980s, thereby magnifying borrowing costs for homes and cars and credit card purchases.

As a result, regardless of whether a recession has officially begun, Americans have increasingly soured on the economy,

So how, exactly, do we know when an economy is in recession? Here are some answers to such questions:

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WHO DECIDES WHEN A RECESSION HAS STARTED?

Recessions are officially declared by the obscure-sounding National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

The committee considers trends in hiring as a key measure in determining recessions. It also assesses many other data points, including gauges of income, employment, inflation-adjusted spending, retail sales and factory output. It puts heavy weight on jobs and a gauge of inflation-adjusted income that excludes government support payments such as Social Security.

Yet the NBER typically doesn’t declare a recession until well after one has begun, sometimes for up to a year. Economists consider a half-point rise in the unemployment rate, averaged over several months, as the most historically reliable sign of a downturn.

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DO TWO STRAIGHT QUARTERS OF ECONOMIC CONTRACTION EQUAL A RECESSION?

That’s a common rule of thumb, but it isn’t an official definition.

Still, in the past, it has been a useful measure. Michael Strain, an economist at the right-leaning American Enterprise Institute, notes that in each of the past 10 times that the economy shrank for two consecutive quarters, a recession has resulted.

Still, even Strain isn’t sure we’re in recession now. Like many economists, he notes that the underlying drivers of the economy — consumer spending, business investment, home purchases — all grew in the first quarter.

Overall gross domestic product — the broadest measure of the nation’s output — declined at a 1.6% annual rate from January through March because of one-off factors, including a sharp jump in imports and a post-holiday season drop in businesses’ inventories. Many economists expect that when GDP is revised later this year, the first quarter may even turn out to be positive.

“The basic story is that the economy is growing but still slowing, and that slowdown really accelerated in the second quarter,” Strain said.

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DON’T A LOT OF PEOPLE THINK A RECESSION IS COMING?

Yes, because many people now feel more financially burdened. With wage gains trailing inflation for most people, higher prices for such essentials as gas, food, and rent have eroded Americans’ spending power,

This week, Walmart reported that higher gas and food costs have forced its shoppers to reduce their purchases of discretionary spending such as new clothing, a clear sign that consumer spending, a key driver of the economy, is weakening. The nation’s largest retailer, Walmart reduced its profit outlook and said it will have to discount more items like furniture and electronics.

And the Fed’s rate hikes have caused average mortgage rates to double from a year ago, to 5.5%, causing a sharp fall in home sales and construction.

Higher rates will also likely weigh on businesses’ willingness to invest in new buildings, machinery and other equipment. If companies reduce spending and investment, they’ll also start to slow hiring. Rising caution among companies about spending freely could lead eventually to layoffs. If the economy were to lose jobs and the public were to grow more fearful, consumers would further reduce spending.

The Fed’s rapid rate hikes have raised the likelihood of recession in the next two years to nearly 50%, Goldman Sachs economists have said. And Bank of America economists now forecast a “mild” recession later this year, while Deutsche Bank expects a recession early next year.

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WHAT ARE SOME SIGNS OF AN IMPENDING RECESSION?

The clearest signal that a recession is under way, economists say, would be a steady rise in job losses and a surge in unemployment. In the past, an increase in the unemployment rate of three-tenths of a percentage point, on average over the previous three months, has meant that a recession will soon follow.

Many economists monitor the number of people who seek unemployment benefits each week, which indicates whether layoffs are worsening. Weekly applications for jobless aid, averaged over the past four weeks, have risen for eight straight weeks to nearly 250,000, the highest level since last November. While that is a potentially concerning sign, it is still a low level historically.

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ANY OTHER SIGNALS TO WATCH FOR?

Many economists also monitor changes in the interest payments, or yields, on different bonds for a recession signal known as an “inverted yield curve.” This occurs when the yield on the 10-year Treasury falls below the yield on a short-term Treasury, such as the 3-month T-bill. That is unusual. Normally, longer-term bonds pay investors a richer yield in exchange for tying up their money for a longer period.

Inverted yield curves generally mean that investors foresee a recession that will compel the Fed to slash rates. Inverted curves often predate recessions. Still, it can take 18 to 24 months for a downturn to arrive after the yield curve inverts.

For the past two weeks, the yield on the two-year Treasury has exceeded the 10-year yield, suggesting that markets expect a recession soon. Many analysts say, though, that comparing the 3-month yield to the 10-year has a better recession-forecasting track record. Those rates are not inverted now.

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WILL THE FED KEEP RAISING RATES EVEN AS THE ECONOMY SLOWS?

The economy’s flashing signals — slowing growth with strong hiring — have put the Fed in a tough spot. Chair Jerome Powell is aiming for a “soft landing,” in which the economy weakens enough to slow hiring and wage growth without causing a recession and brings inflation back to the Fed’s 2% target.

But Powell has acknowledged that such an outcome has grown more difficult to achieve. Russia’s invasion of Ukraine and China’s COVID-19 lockdowns have driven up prices for energy food, and many manufactured parts in the U.S.

Powell has also indicated that if necessary, the Fed will keep raising rates even amid a weak economy if that’s what’s needed to tame inflation.

“Is there a risk that we would go too far?” Powell asked last month. “Certainly there’s a risk, but I wouldn’t agree that’s the biggest risk to the economy. The biggest mistake to make…would be to fail to restore price stability.”

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BANGKOK (AP) — Economies in the Asia-Pacific are forecast to hit the doldrums this year as decades-high inflation and the war in Ukraine compound geopolitical uncertainties and the aftereffects of the pandemic.

A report on Pacific Rim economies by the Asia Pacific Economic Cooperation forum said Friday that growth in the region will likely fall by more than half this year to 2.5% from 5.9% last year, when many countries were recovering from the worst of their COVID-19 outbreaks.

Weaker growth in the U.S. and China is a big factor behind the regional malaise, though other economies are also slowing. Russia’s economy is expected to contract due to the implications of its war in Ukraine, and the three economies account for nearly 70% of the APEC region’s GDP, the report said.

The report forecast that regional growth would only pick up slightly in 2023, to 2.6%.

Most economies in the region are just beginning to fully emerge from border closures and other pandemic-related precautions. Tourists have reappeared on the streets of Bangkok, but many businesses remain shuttered, casualties of the many months when travel was virtually paralyzed.

In China, where authorities are still imposing lockdowns to wipe out COVID-19 outbreaks, the economy contracted 2.6% in the three months ending in June compared with the previous quarter after Shanghai and other cities were shut down to fight coronavirus outbreaks.

The U.S. economy contracted by 0.9% in April-June, while Russia’s economy shrank 0.5% in January-June compared with a year before, according to its Ministry of Economic Development.

Japan’s economy shrank at a 0.5% annual rate i n January-March and is forecast to expand only 2% in the fiscal year ending in March 2023.

Some economies are doing better.

Indonesia reported Friday that its economy grew at a better-than-expected 5.4% annual rate in the April-June quarter as it bounced back from a wave of omicron variant coronavirus infections.

An exporter of raw materials such as coal and palm oil, the country saw its exports jump nearly 20% in the last quarter as prices for many materials soared. But that windfall is likely to dissipate as price increases ease or reverse, analysts said.

“We expect slowing growth in the rest of the world to take its toll … as commodity prices continue to recede. On the domestic front, headwinds from high inflation, which reached a seven-year high and is set to rise further in the coming months, are growing,” Alex Holmes of Oxford Economics said in a commentary.

India is also growing faster than much of the rest of the region.

Reserve Bank of India Governor Shaktikanta Das projected that growth would remain robust, at 7.2% in the financial year ending in March 2023. But to counter inflation that hit 6.7% in June, the central bank raised its key interest rate on Friday by a half percentage point to 5.4%.

More than half of the 21 APEC members have raised rates or otherwise tightened monetary policy to counter inflation, which now averages 5.4% for the region, the APEC report said.

It pointed to a 23% overall increase in the food price index of the U.N. Food and Agricultural Organization, noting that inflation is likely to remain elevated for at least the rest of the year as central banks adjust their policies to try to bring it under control.

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By Ruhi Soni

(Reuters) – Corteva Inc on Thursday reported a 14% jump in second-quarter operating earnings and raised its full-year sales and profit forecasts, benefiting from demand for crop protection products.

U.S. farmers have been encouraged to maximize crop yields after prices of essential grains and oilseeds have surged since the Ukraine war.

Ukraine, long considered the “breadbasket of the Black Sea”, was a major exporter of corn, soybean, and sunflower oil.

Corteva said it recorded a $45 million charge related to exiting its Russian operations.

The Wilmington, Delaware-based agricultural chemicals company, a spin-off of DowDuPont’s historic split in 2019, said its net seed sales grew 4.4% to $3.95 billion as a 7% increase in prices offset lower volumes.

The company’s adjusted operating profits grew 14% to $1.20 billion, or $1.64 per share.

It raised its 2022 net sales forecast to $17.2 billion-$17.5 billion, from its previous guidance of $16.7 billion-$17.0 billion. Full-year operating earnings forecast was raised to $2.45-$2.60 per share from $2.35 to $2.55.

In July, Corteva announced a quarterly dividend of 15 cents per share, up by 1 cent from the previous quarter.

(Reporting by Ruhi Soni in Bengaluru; Editing by Maju Samuel)

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(Reuters) – Warner Bros. Discovery Inc said on Thursday it would merge the HBO Max streaming service with Discovery+ as a single offering, combining WarnerMedia’s dramas, comedies and movies with Discovery’s reality shows.

“With respect to streaming, our main priority right now is launching an integrated SVOD service,” said Chief Executive Officer David Zaslav.

(Reporting by Chavi Mehta in Bengaluru)

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By Kevin Buckland

OTTAWA (Reuters) – Crude oil sank with Treasury yields and the dollar on Thursday as recession worries intensified following the Bank of England’s warning of a drawn-out downturn and ahead of key a hotly anticipated U.S. employment report on Friday.

Wall Street stocks ended mixed, with gains for high-growth stocks offset by the drag from energy shares, as a key U.S. jobs report loomed on Friday.

The S&P 500 edged slightly lower to 4,151.94, retreating from a two-month closing high in the previous session.

The Dow dropped 0.26% to 32,726.82, from near an almost three-month high on Wednesday.

The Nasdaq, though, swung to a 0.44% gain to 13,311.041 from steep early losses, extending a three-month peak.

The two-year Treasury yield eased 7.1 basis points to 3.0366%, while the 10-year yield slipped 6.3 basis points to 2.6846%.

The gap between them went as wide as negative 39.2 basis points earlier in the day, the deepest inversion since 2000. An inverted curve is often viewed as portending a recession.

Crude oil prices dropped to levels last seen before Russia’s invasion of Ukraine. Brent crude futures settled down $2.66 at $94.12, the lowest close since Feb. 18. West Texas Intermediate (WTI) crude futures settled down $2.34 at $88.54, the lowest close since Feb. 2.

Traders fretted that any recession could torpedo energy demand, while an unexpected surge in U.S. crude inventories also weighed on prices, which had surged to over $120 a barrel this year.

Cleveland Federal Reserve Bank President Loretta Mester said on Thursday that the economy is not currently in recession, but the risks of one have risen, while reiterating the central bank’s resolve to continue with aggressive tightening until there is compelling evidence of a let up in inflation.

The monthly U.S. non-farm payrolls report will be closely watched on Friday for clues on whether the tight labor market will continue to push up wages. Data early Thursday showed a tick up in jobless claims.

“Expectations that we’re headed for a recession are clear, and the clearest signal is coming from the Treasury market,” said Edward Moya, senior market analyst at OANDA in New York.

“Things are looking worse abroad, and there’s an expectation that we’re going to see more economic weakness going into year-end, and it’s hard to be optimistic on equities.”

The Bank of England delivered a bigger, half-point rate rise earlier in the day, joining the Federal Reserve and other central banks in an accelerated race to catch inflation. But the hike was widely expected, and investors were more focused on the central bank’s warning that a lengthy recession is on the way.

“The main surprise seems to be the somewhat downbeat economic forecasts that we have also been given,” said Stuart Cole, head macro economist at Equiti Capital.

“That is somewhat worse than what we had seen in May, where the outlook was for one or two difficult quarters of low or negative growth, and then a recovery.”

Britain’s FTSE 100 stock index was little changed, compared to small gains for the pan-European STOXX 600 index following some solid corporate earnings.

The euro added 0.59% to 0.84205 against the British pound, and rose as high as 0.8438 at one point for the first time since July 26.

Sterling recovered though to be up 0.12% at $1.2163 after earlier dipping to $1.2065 for the first time since July 29.

The greenback accelerated declines amid lower U.S. yields, with the dollar index – which measures the currency against six major counterparts including sterling, the euro and the yen – sliding 0.68% to 105.76.

The dollar dropped 0.66% to 132.94 yen, with the currency pair particularly sensitive to long-term Treasury yields.

Spot gold jumped 1.5% to a one-month high of $1,794.79 an ounce, helped by lower U.S. yields and a weaker dollar.

Cryptocurrency bitcoin eased 1.3% to $22,536, as it continued its slow retreat from the 1 1/2-month high at $24,676 reached on Saturday.

It failed to get a lift from Coinbase’s announcement of a tie-up with BlackRock to provide the money manager’s institutional clients with access to crypto trading and custody services.

(Reporting by Kevin Buckland; Additional reporting by Huw Jones; Editing by Alden Bentley, Kim Coghill, Mark Potter and Susan Fenton)

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By Laura Sanicola and Emily Chow

(Reuters) -Oil prices rose on Thursday as supply concerns triggered a rebound from multi-month lows plumbed in the previous session after U.S. data signalled weak fuel demand.

Brent crude futures rose 10 cents, or 0.1%, at $96.88 a barrel at 0653 GMT, while West Texas Intermediate (WTI) crude futures was last up 21 cents, a 0.2% gain, at $90.87.

Both benchmarks fell to their weakest levels since February in the previous session after U.S. data showed crude and gasoline stockpiles unexpectedly surged last week and as OPEC+ agreed to raise its oil output target by 100,000 barrels per day (bpd), equal to about 0.1% of global oil demand.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, have been previously increasing production but have struggled to meet targets as most members have already exhausted their output potential.

“OPEC+ agreed to increase production by 100,000 barrels per day in September, far lower than previous months’ production. The global energy market still faces supply shortages,” said Leon Li, an analyst at CMC Markets.

He added that WTI oil prices are “likely to oscillate” between $90 and $100 a barrel.

While the United States has asked the group to boost output, spare capacity is limited and Saudi Arabia may be reluctant to beef up production at the expense of Russia, hit by sanctions over the Ukraine invasion that Moscow calls “a special operation”.

Ahead of the meeting, OPEC+ had trimmed its forecast for the oil market surplus this year by 200,000 barrels per day (bpd) to 800,000 bpd, three delegates told Reuters.

“It looks like OPEC+ is resisting calls to boost output because the crude demand outlook continues to get slashed. The world is battling the ongoing global energy crisis and it won’t be getting any help from OPEC+,” Edward Moya, senior analyst with OANDA, said in a note.

“The oil market will remain tight over the short term and that means we should still have limited downside here. Crude prices should find strong support around the $90 level and eventually will rebound towards the $100 barrel level even as the global economic slowdown accelerates.”

Oil’s demand outlook remains clouded by rising fears of an economic slump in the United States and Europe, debt distress in emerging market economies, and a strict zero COVID-19 policy in China, the world’s largest oil importer.

U.S. crude oil inventories had also rose unexpectedly last week as exports fell and refiners lowered runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration said.

Supporting prices on Thursday, however, the Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, said that supplies were significantly down, without providing figures.

(Reporting by Laura Sanicola and Emily Chow; Editing by Kenneth Maxwell)

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FRANKFURT (Reuters) – Consumers in the euro zone are bracing for the economy to shrink and for high inflation to continue eating into their income in the next year, a European Central Bank survey showed on Thursday.

The Consumer Expectations Survey, used by policymakers for input in their deliberations and published on Thursday for the first time, showed households were beginning to lose faith in the ECB’s ability to bring inflation back down to its 2% goal.

The poll, carried out in June, showed the median consumer expected prices to grow by 5% over the following year and saw inflation at 2.8% in three years’ time.

This compares to expectations for nominal income to grow by 0.9% and spending by 3.9%, implying a large dent in households’ ability to save.

Consumers also expected the economy to contract by 1.3% in the coming 12 months.

By comparison, the ECB expects inflation to average 6.8% in 2022 before falling to 3.5% in 2023 and 2.1% in 2024. It sees growth at 3.7% this year, 2.8% next year and 1.6% in 2024.

The ECB raised interest rate by 50 basis points last month and guided for more hikes in the months ahead to fight record-high euro zone inflation, which hit 8.9% last month.

It cited “anchoring…inflation expectations” as one of the reasons for the move.

For the survey, the ECB interviews around 14,000 adults each month from Belgium, Germany, Spain, France, Italy and the Netherlands. These countries represent 85% of the euro area’s GDP and 83.8% of its population.

(Reporting By Francesco Canepa; Editing by Bernadette Baum)

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By Anshuman Daga

SINGAPORE (Reuters) -Singapore’s DBS Group warned inflation and geopolitical uncertainty may impact second-half performance too, after the wealth business of the bank suffered in the latest quarter, though profit beat estimates on rising interest rates.

The quarterly earnings from DBS, Southeast Asia’s largest lender, rounded off a strong reporting season for Singapore banks after local peers OCBC beat estimates and United Overseas Bank flagged further improvement in net interest margins, a key profitability gauge.

“There’s just too much geopolitical uncertainty right now and that’s hard to translate into what does it do to the macro economy,” DBS CEO Piyush Gupta told reporters on Thursday, citing the Russia-Ukraine war and its impact on gas and oil prices, among other factors.

“The big underlying uncertainty is inflation and what will the central banks do to control it, so that’s the second order impact of that. Right now, the market is split on whether you get a deep recession or you get high inflation,” Gupta said.

DBS shares fell as much as 0.9% before paring losses to 0.3% in late afternoon trade in a strong broader market.

The bank’s first-half net interest margin improved to 1.52% from 1.47%, marking the first improvement in three years.

Singapore lenders were expected to report 10 basis points net interest margin expansion in April-June on a quarter-to-quarter basis, the highest over the last eight quarters, outperforming Asian peers, JPMorgan analysts said last month.

Net profit for DBS came in at S$1.82 billion ($1.30 billion) in April-June versus S$1.7 billion a year earlier and compared with an average estimate of S$1.69 billion from five analysts compiled by Refinitiv.

Singapore banks are also benefiting from a rebound in economic activity in the Asian financial hub after the government relaxed most of its COVID-19 restrictions in April.

However, a sharp pullback in global stock markets this year has battered investor sentiment, impacting the large wealth management businesses of banks such as DBS.

The bank said net fee income fell 12% in the second quarter due to lower contributions from wealth management and investment banking that more than offset increases in other fee activities.

DBS said its ongoing stress tests indicated that its asset quality continues to be robust. It maintained its full-year loan growth forecast at mid-single digit percent.

($1 = 1.3801 Singapore dollars)

(Reporting by Anshuman Daga; Editing by Sam Holmes and Muralikumar Anantharaman)

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BIRMINGHAM, Ala. (AP) — A federal oversight board ordered the United Mine Workers of America to pay more than $13 million in compensation to an Alabama coal company where members have been on strike for more than a year, a ruling the union said Wednesday it would challenge.

The National Labor Relations Board said Warrior Met Coal Mining was due some $13.3 million for costs including increased security, damage repair and lost revenues from unmined coal, and individuals were due almost $30,000, mostly for damage to vehicles. Both amounts included interest.

The union, with roughly 1,100 members who went on strike against the Alabama-based company on April 1, 2021, called the NLRB assessment an “outrageous” decision that it planned to fight.

“Is it now the policy of the federal government that unions be required to pay a company’s losses as a consequence of their members exercising their rights as working people? This is outrageous and effectively negates workers’ right to strike. It cannot stand,” international union president Cecil E. Roberts said in a statement.

A company representative did not immediately return an email seeking comment. The NLRB issued the order on July 22.

Both the union and Warrior Met have blamed each other for the prolonged strike, which centers on the company’s mining operations southwest of Birmingham. The two sides have talked as recently as last week, a union spokesman said.

The union is striking at Warrior Met’s No. 4 and No. 7 mines, a preparation plant and a central shop, all in Tuscaloosa County. The union and Warrior Met reached an agreement to end the walkout a few days after it began, but members rebuffed the settlement.

United Mine Workers has said union members gave up money to bring the company out of the Walter Energy bankruptcy six years ago, and workers have sought improved health benefits. Warrior Met contends it offered workers a competitive package that would protect jobs and the company’s future.

In May, Warrior Met reported net income of $146.2 million in the first quarter compared with a loss of $21.4 million for the same period last year. The company said the strike cost it $6.7 million for the quarter because of security and other expenses, and having the mines idle cost $3 million.

Warrior Met said it produced 1.5 million short tons of coal in the first quarter compared with 2.2 million short tons in the first quarter last year.

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Benchmark U.S. crude oil for September delivery fell $3.76 to $90.66 a barrel Wednesday. Brent crude for October delivery fell $3.76 to $96.78 a barrel.

Wholesale gasoline for September delivery fell 15 cents to $2.91 a gallon. September heating oil rose 3 cents to $3.41 a gallon. September natural gas rose 56 cents to $8.27 per 1,000 cubic feet.

Gold for December delivery fell $13.30 to $1,776.40 an ounce. Silver for September delivery fell 25 cents to $19.89 an ounce and September copper fell 5 cents to $3.47 a pound.

The dollar rose to 134.12 Japanese yen from 133 yen. The euro fell to $1.0154 from $1.0174.

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