Nber business cycle dating committee
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Source: Center for Economic Policy Research (CEPR) Karl Whelan – a member of the Committee – writes that given the small size of the declines in GDP reported by Eurostat, you might question whether the CEPR committee’s recession call is a marginal one or whether it may be reversed after the data get revised.But the CEPR Committee argues that it is confident that 2011Q3 marks the beginning of a recession in the euro area.
What’s at stake: Eurostat announced this week that euro area GDP declined for a second consecutive quarter – pushing back the euro area into recession according to the commonly used rule of thumb for defining a recession.
But the European equivalent to the NBER’s business cycle committee – generally seen as the authority for dating US recessions – announced that the recession actually started earlier than that, arguing that the euro area has been in a recession since economic activity peaked in the third quarter of 2011.
The CEPR committee's procedure for identifying turning points, established in 2002, slightly differs from that of the NBER to help deal with heterogeneity across euro area countries.
The CEPR committee’s procedure for identifying turning points, established in 2002, slightly differs from that of the NBER to help deal with heterogeneity across euro area countries.
In its Flash estimate for Q3 2012 Eurostat reports that GDP is down by 0.1% in the euro area compared to the previous quarter and down by 0.6% compared with the third quarter of 2011.
Source: Center for Economic Policy Research (CEPR) The CEPR Committee concluded that economic activity in the euro area peaked in the third quarter of 2011 and that the euro area had been in recession since then.
The third quarter of 2011 marked the end of an expansion that began in the second quarter of 2009 and lasted 10 quarters.Although output increased 4.03 per cent from trough to peak, this was not enough to bring euro-area GDP back to its pre-financial crisis level: at the end of the expansion in 2011Q3, GDP was about 2% below its previous 2008Q1 peak.The Committee’s procedure for identifying turning points differs from the two-quarter rule in a number of ways.First, we do not identify economic activity solely with real GDP, but use a range of indicators, notably employment.Second, we consider the depth of the decline in economic activity.Several other key macroeconomic aggregates have also been decreasing markedly since the third quarter of 2011, such as euro-area consumption, investment and employment.