3) The Eurozone enters recession - Practically the entire Eurozone falls into recession, including the likes of France and Germany. A deteriorating economic outlook causes deficit estimates to be raised across the board, facilitating credit rating downgrades. Agreements for greater austerity fail to stem the tide and other attempts to kick the can down the road are pursued.While many sources expected and continue to expect a rebound in growth, I have consistently highlighted weakening data and economic policies that would only depress growth further. Well, according to The Euro Area Business Cycle Dating Committee of the Centre for Economic Policy Research (CEPR), the euro-area is now officially in a new recession. What may surprise many readers is that the recession officially began in the third quarter of 2011. The failure of many economists and other forecasters to acknowledge the probability of a recession that had already begun several months earlier is all too reminiscent of commentary during the first half of 2008. Considering current and proposed policies within the euro-area, I fully expect the recession to continue and likely worsen in 2013.
(Note: Credit ratings downgrades have also come in mass this year with France the most recent recipient, losing its AAA rating from Moody’s yesterday.)
(h/t James Hamilton @ Econbrowser)
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