The US economy may have eked out modest growth in the second quarter, skirting back-to-back quarterly contractions, but rising at a tepid enough pace to feed concerns of an eventual downturn.

Economists expect gross domestic product grew an annualized 0.4% in the April-June period, which on the surface would be an improvement after the 1.6% drop in the first quarter. However, the breakdown of second-quarter GDP may illustrate a more concerning softening of demand.

The first-quarter decline largely stemmed from a surge in imports and a more moderate pace of consumption. While a narrowing of the trade deficit in the second quarter likely added to GDP, consumer spending probably decelerated further.

Walmart Inc. on Monday announced a cut in its profit outlook, raising concerns about the wherewithal of consumers to sustain discretionary spending, especially for big-ticket items. The retail heavyweight’s warning follows a similar move last month by Target Corp. as companies contend with a buildup in stockpiles of unwanted merchandise.

Cooler business investment, a weaker housing market and a slower pace of inventory growth are also seen taking a bite out of second-quarter GDP.

“One thing that we’re all watching is how swiftly underlying activity is slowing down,” said Andrew Hollenhorst, chief US economist at Citigroup Inc. “Economists can debate what a recession is, but at the end of the day, if businesses and individuals believe there is a recession that’s how they’ll behave.”

The economy may grow just enough to avoid two straight quarters of economic contraction, a common rule-of-thumb definition for recession, but forecasts vary widely. Roughly a third of economists said GDP declined, including Bank of America Corp. and Deutsche Bank AG. Estimates range from a 2.1% drop to a 2% advance in Bloomberg’s survey of economists.

In the US, a group of academics at the National Bureau of Economic Research makes the official recession call. They define a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months” and look at a variety of factors to make their determination.

Data released Wednesday prompted a few economists, including those at JPMorgan Chase & Co., to raise their second-quarter GDP forecasts. The merchandise trade deficit narrowed in June by more than expected and inventories at retailers and wholesalers both solidly increased. Core capital goods shipments also increased.

Even if Thursday’s report shows GDP increased, fears are mounting that decades-high inflation and a Federal Reserve determined to curb it will ultimately send the economy into a recession. The Fed has embarked on the most aggressive tightening campaign since the 1980s and is expected to boost interest rates by yet another 75 basis points later on Wednesday.

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