Double-Dip Ahead?

Sharp Contraction in France

Eastern Europe Covid Deaths

Furloughed Job Disguise

No Trade Deal

Yes, Deaths are a Problem

Due to another Covid surge in Europe and the US, the odds of a double-dip recession (or a delay in the current one ending) have increased.

Europe is also at risk from a collapse in a trade deal between the UK and EU following Brexit.

First Things First

Before you can have a double-dip recession, the current one has to end first.

And that largely depends on how one measures it.

Europe vs the US

European countries typically use a simple rule. Two consecutive quarters of contraction marks a recession.

In the US, the NBER can declare a recession even before there is one quarter of contraction. It did so in February of this year.

I have seen claims the US recession is over already. But the recovery is so uneven I doubt the NBER (the official arbiter of recessions in the US), would see it that way. But perhaps they do.

In Europe, countries  may very well declare a recession is over as soon as there is a single quarter of growth.

Whether or not there is a double-dip may be in the eyes of the beholder. 

Flash PMI Signals Renewed Economic Downturn

In Europe, Flash PMI signals renewed economic downturn at start of fourth quarter

Business activity fell back into decline across the eurozone in October as accelerating growth of manufacturing output was overwhelmed by a steepening deterioration in the service sector amid rising COVID-19 worries.

Germany was the only bright spot, as France and the rest of the region as a whole fell deeper into decline. The rate of job losses eased, but forward -looking indicators deteriorated: inflows of new business showed a renewed decline and business optimism for the year ahead slipped to the lowest since May.

Deflationary pressures meanwhile eased as business costs rose at a faster rate. The flash IHS Markit Eurozone Composite PMI fell for a third consecutive month in October, dropping from to 50.4 in September to 49.4 to register the first contraction of business activity since June

US Recession Over?

Some claim the US recession is already over. If so, it was the most uneven recovery in history.

An L-, K-, or W-shaped recovery isn't much of a recovery whether or not there is a double dip.

For further discussion, please see It's Professionals vs Everyone Else in the K-Shaped Recovery 

Mish

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