U.S Economy Continues To Struggle As Recession Could Be On The Horizon

According to the Bureau of Economic Analysis, the United States economy has shrunk once again in the year&rsquos second quarter, causing many to believe that a recession could indeed be inevitable. GDP, a broad yet crucial indicator of economic activity, decreased by nearly 1% year on year from April to June. This drop represents a significant symbolic threshold for the most widely used, however unofficial, definition of a recession with regards to two consecutive quarters consisting of negative economic growth.

What is perhaps more interesting though is the notion that individuals are moving away from traditional financial institutions and practices in favor of new digital assets such as cryptocurrencies. After all, many believe that we are on the cusp of entering the Web3 era and that plenty of economic activity which was previously used as a measure of success could soon become obsolete.

How did we get to this point?

The decline in second-quarter GDP activity in 2022 was primarily caused by a drop in inventory levels. In recent quarters, businesses have attempted to resupply stockpiles depleted during the pandemic, and in attempting to adjust for supply chain disruption, they have ended up being overstocked at a time when consumers are experiencing reduced purchasing power due to rising inflation. As a result, inventory investments in the second quarter were considerably lower than in the year&rsquos first quarter.

Still, there are some who believe that things are not as bad as they appear. The current administration made the unusual choice of publishing a sort of explainer, arguing that two consecutive quarters of economic contraction do not necessarily constitute a recession. Recently, the White House stated that, in addition to GDP, data on the labor market, personal and corporate spending, production, and different types of income all contribute to defining a recession in this day and age. Others believe that the economy has just slowed down, and that this is not an accurate measure of micro-level statistics such as employment levels, salaries, and overall consumer behavior.

A shift in attitude

As previously mentioned, rising inflation rates and the very real possibility of a looming recession has resulted in a growing number of individuals actively seeking alternative means of securing an income. Apart from those typically involved with mainstream digital assets like cryptocurrencies and NFTs, there are also many people who are utilizing the P2E concept alongside the metaverse to generate passive income, despite the fact that the metaverse in particular has not been around for very long.