[Source: CBS News]

The U.S. economy shrank between April and June of this year, marking the second consecutive quarter of declining economic activity — a sign the U.S. may be teetering on the edge of a recession.

The nation’s gross domestic product, a measure of total spending on goods and services across the economy, fell at an annual rate of 0.9%, the Commerce Department said Thursday.

The contraction follows a 1.6% decline in economic activity in the first three months of the year and means the U.S. could currently be in a recession, which is broadly defined as two straight quarters of negative growth.

The hottest inflation in 40 years is crimping household budgets, with some consumers struggling to cover basics such as gasoline, food and rent, which have sharply risen in price from a year ago.

At the same time, the Federal Reserve on Wednesday raised interest rates for the fourth time this year in an effort to dampen inflation. But that is also making it more expensive for consumers and businesses to borrow for big purchases like homes and cars.

“[T]he reported weakening in domestic demand confirms the economy is rapidly downshifting amid stubbornly high inflation and aggressive Fed tightening,” wrote Lydia Boussour, lead U.S. economist at Oxford Economics, in a research note.

In the second quarter, GDP was impacted by decreases in investment in private inventory, residential fixed investment and government spending. Americans held off on purchases, reducing spending at retailers as well as car dealers, the Commerce Department said.

Boussour added, “While we continue to see a pathway to a softish landing, it’s admittedly narrowing.”