{"id":59884,"date":"2012-05-03T10:57:26","date_gmt":"2012-05-03T00:57:26","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2012\/05\/03\/have-the-us-and-european-economies-parted-company\/"},"modified":"2012-05-03T10:57:26","modified_gmt":"2012-05-03T00:57:26","slug":"have-the-us-and-european-economies-parted-company","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2012\/05\/03\/have-the-us-and-european-economies-parted-company\/","title":{"rendered":"Have The US And European Economies Parted Company?"},"content":{"rendered":"

\n\tThe US And European Economies Parted Company? The Signals Are Increasingly Clear<\/strong><\/p>\n

\n\tBy Now-Casting's Domenico<\/span> Giannone<\/span>, Jaspar<\/span> McMahon, Lucrezia<\/span> Reichlin<\/span> and Saverio<\/span> Simonelli<\/span><\/p>\n

\n\tAccording to official statistics, the UK and Europe are heading for recession, while the US is recovering. This has led some to suggest that European economies are moving in the opposite direction to the US. This column, written by the co-founders of Now-Casting, presents new now-casting estimates that put Europe and the US even further apart.<\/em><\/p>\n

\n\tAccording to the NBER<\/span> (2012), the last recession ended in June of 2009. CEPR<\/span> (2012) dates the end of the recession in the Eurozone<\/span> in the same quarter. For the UK, there is no established chronology but a visual inspection of Figure 1 shows that the recession and the subsequent recovery in the three economies have been highly synchronised<\/span>.<\/p>\n

\n\tAlso evident is the deceleration of the recovery in mid-2010 – just as the European sovereign crisis was gathering momentum. After a year or so of similarly faltering recoveries, however, the fourth quarter of 2011 seems to mark the point at which the path of the US diverged from that of the Eurozone<\/span> and the UK. Since then the UK, although with very volatile readings, seems to have gone back into recession while growth in the Eurozone<\/span> went negative in the fourth quarter of 2011.<\/p>\n

\n\tFigure 1.<\/strong> Growth rate of real GDP<\/p>\n

\n\t\"\"<\/p>\n

\n\tWhile we still don’t have an official number for the first quarter of 2012 for Eurozone<\/span> GDP, the preliminary numbers for the US and the UK were published last week. The UK, with an annualised<\/span> quarter-on-quarter growth rate estimated at -0.80%, is now officially back in recession (the official, annualised<\/span>, figure for growth in Q4<\/span> 2011 was -1.21%). US GDP, on the other hand, had an estimated growth rate of +2.22% (annualised<\/span>) for Q1 2012, which confirms the recovery although it signals a slowdown from the revised quarter on quarter growth rate of 2.99% (annualised<\/span>) for Q4<\/span> 2011.<\/p>\n

\n\tNew independent estimates<\/strong><\/p>\n

\n\tOur estimates (Now-Casting Economics 2012) challenge the official view. They are computed automatically (without judgmental input) by a model which is based on many variables including both hard data, such as industrial production and employment, and soft data – ie<\/span>, surveys, which provide timely indications of the current state of the economy. Now-Casting estimates are shown in Figure 1 above as dotted lines. These clearly suggest that:<\/p>\n