– French Central Bank Admits the Obvious: France Back in Recession (Global Economic Analysis, Aug 8, 2012):
For those who who view matters on a practical basis, France has been in recession the entire year. For those who need to see two quarters of negative growth first, France slides back in recession.
France is headed back into recession for the second time in just over three years, the country’s central bank warned on Wednesday.
The Bank of France predicted a 0.1 percent contraction in gross domestic product (GDP) for the third quarter of this year, an outcome which, if confirmed, would follow a similar fall in output for the three months to June.
Economists define a recession as two consecutive quarters of negative growth.
The economy was flat in the first three months of 2012 but the deteriorating outlook has forced the Socialist government to cut its growth forecast for the full year from 0.4 to 0.3 percent, and for 2013 from 1.7 to 1.2 percent.
Definition of Recession
Bear in mind that a recession, at least is the US, does not require two consecutive quarters of negative GDP. Rather, the NBER, the official arbiter of recessions, looks at a whole gamut of factors.
The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
Recessions frequently start (as did the last one), without even a single quarter of negative GDP.
Two quarters of negative GDP is a sufficient but not necessary condition so the statement in the article “Economists define a recession as two consecutive quarters of negative growth” is simply wrong.
Europe in Recession
Recall that back in January IMF head Christine Lagarde said she thought it was possible for the eurozone to avoid a recession.
On January 9th, my take was Dimwit Comment of the Day: Christine Lagarde, IMF Director says “Europe May Avoid a Recession This Year”.
Even those waiting for two quarters of negative growth cannot hide the obvious: Italy, Spain, Greece, Portugal, and France are all in recession. Germany is headed there.
The recession in Europe is about to get much worse because of preposterous tax hikes nearly everywhere, coupled with inane policy moves in France, notably Hollande About to Wreck France With Economically Insane Proposal: “Make Layoffs So Expensive For Companies That It’s Not Worth It”