Frequently Asked Questions


How does the Committee Define a Business Cycle?

See Methodology.

What data does the Committee use?

See Data Sources.

Does CEPR use a different approach to NBER?

See The CEPR and NBER Approaches.

The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to your recession dating procedure?

Most of the recessions identified by the Committee’s procedures consist of two or more quarters of declining real GDP, but declining real GDP is not the only indicator used. As an example, the Committee has identified the period from the first quarter in 1980 to the third quarter in 1982 as a recession, even though real GDP was growing in some quarters during that episode and that real GDP was higher at the end of the recession than at the beginning. As another example, the Committee did not declare a recession for 2001 or 2003, even though the data at the time appeared to show a decline in economic activity (though not for two quarters). Subsequent data revisions have erased these declines.

Why doesn’t the Committee accept the two-quarter definition?

The Committee’s procedure for identifying turning points differs from the two-quarter rule in several 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. Recall that our definition includes the phrase, “a significant, broad-based decline in activity.”

Isn’t a recession a period of diminished economic activity?

It’s more accurate to say that a recession — in the way we use the word — is a period of diminishing activity rather than diminished activity. We identify a quarter when the economy reached a peak of activity (P) and a later quarter (T>P) when the economy reached a trough. The quarters P+1 to T (with P+1 and T included) constitute a recession, a period when economic activity is contracting. The following period is an expansion.

How long does the Committee expect the recession to last?

The Committee does not forecast.

How is the Committee's membership determined?

The Chair of the CEPR - Euro Area Business Cycle Dating Committee (EABCDC) is appointed by the President of CEPR and the Scientific Chair of EABCN. The members of the Dating Committee are then appointed by the President of CEPR, the Scientific Chair of EABCN, the Scientific Vice-Chair of EABCN and the Chair of the CEPR-EABCDC.

Does the Committee date recessions for individual countries in the euro area?

No, the sole objective of the Committee is to date recessions for the Euro area as a whole.

Why does the Committee not date recessions for individual countries? Is it possible that the euro area is in a recession while some of the individual countries are not?

The Committee wants to make sure that its characterization of euro-area economic activity (which is its sole objective) is not affected by rising heterogeneity in the euro-area. Adopting a dating criterion that refers solely to aggregate euro-area economic activity achieves this objective most transparently. Note that since October 2012 the Committee has dropped its requirement that peaks or troughs mark turning points in economic activity in most countries of the euro area. The rationale for this definitional change is explained in detail in {link to methodological note}. It is thus possible that the euro-area is in a recession while some of the individual countries are not, and that the business cycle dates differ for the euro-area and for individual countries. For instance, 2011Q3 is a peak in the euro-area as a whole, but not for Germany. A detailed analysis of heterogeneity in individual countries' business cycles is included in the Committee's releases since its creation.

When does the Committee meet? When does it release its findings?

The Committee meets when it feels that data developments warrant examining whether there has been a turnaround in economic activity, but also meets twice a year to assess the state of the euro area business cycle even if there is no sign of a cyclical turning point. Since October 2013, the Committee releases its findings after each meeting – whether or not it has decided to date a trough or a peak. Previously, it did so only after meetings that did date a turnaround. The rationale for this change is that the Committee feels that the decision not to date is as informative as a decision to date.