From the CEPR-EABCN Eurozone Business Cycle Dating Committee (June 30 meeting), ‘Not every downturn is a recession’
Two quarters of very mild negative growth led to talk of a recession.this
The committee defines a recession as A significant decline in the level of economic activity across the euro area, usually manifested in two or more consecutive quarters of negative growth in GDP, employment and other indicators of overall economic activity across the euro area. This is more than two quarters of negative growth. Negligible negative growth rates are regularly observed when trend growth is so close to zero, and may not in themselves constitute a recession. Especially in this context, the labor market continues to perform well, with job growth and unemployment in the euro area at an all-time low.
If 2Q rules were applied blindly to US data, then the US wouldn’t have had a 2001 recession, right (although it could have lasted for a few periods). This is the GDP of the Eurozone.
figure 1: Eurozone 19 GDP (blue), instant forecast as of 30 June (brown squares), both in billion Ch. 2010 EUR SAAR. CEPR-EABCN recession peak-to-trough dates are shaded in light green. Nowcast for June 30 from Cascaldi-Garcia, Ferreira, Giannone and Modugno. Source: OECD, via FRED, Cascardi-Garcia, Ferreira, Giannone and Modugno, CEPR-EABCNand the authors’ calculations.
Note that while GDP has plateaued over the past two quarters, employment has continued to grow.
source: trade economic network.
While a recession seems unlikely in the first quarter, the second quarter is not guaranteed (-1.0% q/q on 6/30) from the immediate GDP forecast in Figure 1.
