The US economy shrank again in the last three months, unofficially signaling the start of a recession.

The commerce department announced Thursday that gross domestic product (GDP) – a broad measure of the price of goods and services – decreased at an annual rate of 0.9% in the second quarter after falling at an annual rate of 1.6% in the first three months.

The bad news will be a major blow for the Biden administration as it prepares for a tough midterm election season. White House officials have tried to tamp down talk of a recession, arguing that many parts of the economy remain strong.

The growth rate stands in marked contrast to the robust 6.9% annual increase in GDP recorded in the final quarter of 2021 when the economy roared back from Covid shutdowns.

The fast pace of growth contributed to soaring inflation – now running at 40-year highs – and the Federal Reserve’s decision to sharply increase interest rates in order to bring down prices.

The changing economic environment was reflected in the GDP report. Consumer spending – the largest driver of the economy – slowed over the quarter but remained positive, rising 1% on an annual basis. Residential fixed investment, or home construction, dropped 14% on an annual basis and slowing business inventories, goods produced but not yet sold by businesses, dragged down the GDP number.

Two quarters of negative GDP growth are widely regarded as a signal that the economy has gone into recession. But the National Bureau of Economic Research (NBER) is the official arbiter of when recessions begin and end. While the GDP figures will play into the NBER’s final verdict, it also looks at a wider range of economic factors, including the jobs market, and is unlikely to give its decision soon.