From the CEPR-EABCN Eurozone Economic Cycle Dating Committee (meeting of June 30), “Not all downturns are recessions”
Two quarters of very slightly negative growth gave rise to talk of a recession. THE
The Committee defines a recession as a significant decline in the level of economic activity, spread across the euro area economy, generally visible for at least two consecutive quarters of negative growth in GDP, employment and other measures of overall economic activity for the euro area as a whole. That’s more than two quarters of negative growth. When trend growth is so close to zero, insignificant negative growth rates should be observed with some regularity and may not in themselves constitute recessions. Here, in particular, the labor market continues to do well, with employment growing and unemployment in the Eurozone at an all-time low.
Figure 1: Eurozone GDP 19 (blue), nowcast as of 30/06 (brown square), both in billions of Ch.2010EUR SAAR. CEPR-EABCN peak-to-trough recession dates are shaded in light green. 6/30 now airing from Cascaldi-Garcia, Ferreira, Giannone and Modugno. Source: OECD via FRED, Cascaldi-Garcia, Ferreira, Giannone and Modugno, CEPR-EABCNand the author’s calculations.
Note that while GDP has stabilized over the past two quarters, employment has continued to rise.
Although it seems unlikely that the recession will apply to the first quarter, there is no guarantee that when the second quarter data arrives, a recession is dated, perhaps as starting in the first quarter or even in the fourth. quarter (the 6/30 reading is for -1.0% q/q in Q2).