Tracking the Euro Area at High Frequency

There aren’t many measures of euro area wide economic activity at higher than monthly frequency, to my knowledge. One series is the Woloszko (OECD) Weekly Tracker, based upon big data and machine learning, discussed   here. VoxEU post here. This measure shows deceleration in the week through 9/17.

Figure 1: Woloszko (OECD) Weekly Tracker for Euro Area (black), Germany (blue), France (green), Italy (red), all in %. OECD.

The OECD Weekly Tracker reading of 1.6 is interpretable as a y/y growth rate of 1.6% for year ending 9/17. How well does the OECD Weekly Tracker to for the Euro Area? Here is the Tracker time averaged to conform to quarterly data.

Figure 2: Year-on-year Euro area real GDP growth  (teal), and implied growth from Weekly Tracker (black), both in %. Weekly Tracker for Q3 is thru 9/17. CEPR defined peak-to-trough recession dates shaded light green. Source: Eurostat via FRED, OECD, CEPR, and author’s calculations.

The Weekly Tracker follows q/q annualized growth pretty well for the Euro area (it’s not so good for the US).

What’s apparent is that GDP growth is decelerating — down to 2%. Interestingly, the Cascaldi-Garcia, Ferreira, Giannone & Modugno Euro area nowcast of 9/23 is for 0.1% q/q growth, which is in turn consistent with 2.03% y/y growth.

(The Deutsche Bundesbank as a series for Germany, here.)


Interestingly, Deutsche Bank, which has just updated its forecasts, sees a small q/q decline in Euro area GDP in Q3, and deep declines in subsequent quarters, of -1, -1.2, and -0.5 percentage points.

Source: Sidorov, et al. “Forecast Update: Deeper inflationary recession,” Focus Europe, Deutsche Bank, 21 September 2022.




21 thoughts on “Tracking the Euro Area at High Frequency

  1. ltr

    Deutsche Bank, which has just updated its forecasts, sees a small q/q decline in Euro area GDP in Q3, and deep declines in subsequent quarters, of -1, -1.2, and -0.5 percentage points.

    [ This strikes me as the realistic projection; my understanding is that German production is being limited and moved from the country to limit costs. Also, the lacking nuclear infrastructure in France and the generally limited integration of new energy sources into national electric grids are unfortunately surprising. ]

    1. JohnH

      The mood in Germany is pretty gloomy:

      Der Spiegel:”The first German companies have begun throwing in the towel and consumption is collapsing in response to the fallout from exploding energy prices. The economy is sliding almost uncontrolled into a crisis that could permanently weaken the country.”

      Could Michael Hudson be right that one of the US’ intended victims of the Ukraine war is Germany? “America Defeats Germany for the Third Time in a Century”

      [Of course, some commenters think that this has nothing to do with geopolitics or natural gas exports, but exclusively freedom, democracy and human rights! Nonetheless you have to admit that the energy industry has been an enormous beneficiary.]

      “Joe Biden’s administration adopted the gas industry’s major demands as policy. They paved the way for new pipelines and export facilities, established a new taskforce to boost gas exports to Europe and approved $300m in funding to help build out gas infrastructure on the continent.

      “I can’t even begin to tell you how much the momentum has changed for companies in the United States that have wanted to bring their projects forward and just haven’t been able to get long-term contracts,” said a jubilant Fred Hutchison, president of LNG Allies, the industry group that sent the letter, just three weeks after both the military and lobbying pushes started….

      The US only began shipping LNG overseas in 2016 but has now become the largest exporter in the world, surpassing longtime export leaders Qatar and Australia. The majority of the gas is fracked in the Permian basin, an oil- and gas-rich area in Texas and New Mexico, before being taken in pipelines and by train to the Gulf of Mexico coast, where it is chilled and loaded on to ships.

      Three export facilities under construction on the coast are set to further cement American dominance of the sector when they are fully operational by 2025.”

    1. Moses Herzog

      @ “Anon” Do you think in the CONTEXT of war, and human suffering in Ukraine/ maybe soon East Europe, it might be looked at in a different way than you said now…. ??? Your mother should have aborted you, you are a walking/living argument for abortion

      1. Anonymous

        that anonymous uses the shift key.

        but i do think the brits can benefit from more gas….

        reference to killing innocents is noted

        juxtaposed to your concern for ukraine suffering

    2. ltr

      September 23, 2022

      Wonking Out: The tax-cut zombie attacks Britain
      By Paul Krugman

      Britain is in a very difficult economic position. The British economy, like the U.S. economy, seems to be seriously overheated, with substantial amounts of inflation driven by high domestic demand. Unlike America, it is also facing the full force of Europe’s energy crisis, driven by the efforts of President Vladimir Putin of Russia to use a shut off of natural gas to bully the West into abandoning Ukraine.

      So many of us expected Britain’s economy to go through a rough patch in the months, or maybe even years, ahead. What few foresaw, as far as I can tell, was a policy zombie apocalypse.

      I’ve written a lot over the years about zombie economic ideas — ideas that have failed repeatedly in practice, and should be dead, but somehow are still shambling around, eating policymakers’ brains. The pre-eminent zombie in American economic discourse has long been the belief that cutting taxes on the rich will create an economic miracle.

      That belief is still out there: Even as its infrastructure was collapsing to the point that its largest city no longer had running water, Mississippi tried to raise its economic fortunes with … a tax cut. But in America, zombie economics has lately been overshadowed by zombie beliefs about election fraud, the impact of immigration and so on.

      Britain, however, doesn’t (yet?) have an equivalent of the MAGA movement. What it does have is Liz Truss, a new prime minister who seems to be an ardent believer in economic fallacies from the Thatcher/Reagan era.

      Before I get to the economic plan that has produced chaos in Britain’s bond and currency markets, let’s talk about the myths that seem to have inspired her.

      The important point to understand is that there isn’t a serious debate about the proposition that tax cuts for the rich strongly increase economic growth. The truth is that there is no evidence — none — for that proposition.

      Of course, people on the right, raised on the legend of Saint Reagan, believe that his tax cuts did wonders for the U.S. economy. But the data don’t agree.

      Reagan did drastically cut taxes on high incomes. Here are Congressional Budget Office estimates of the average federal tax rate paid by the top 1 percent:

      The ups and downs of elite taxes.

      Note both the steepness of the Reagan cut and the rise under Clinton, both of which are relevant to the story.

      So what did happen to economic growth? It’s important to distinguish between the long-run trend — which was what tax cuts were supposed to improve — and business cycle fluctuations. Here’s real G.D.P. from the early 1970s (when for some reason growth slowed around the world) until the end of the Reagan era, measured on a log scale so that a straight line represents steady growth:

      What Reagan didn’t achieve….

  2. pgl

    Did William Barr help Caterpillar with tax evasion and accounting fraud?,2017%20for%20documents%20linked%20to%20the%20tax%20matter.

    Caterpillar has settled a long-running tax dispute with the Internal Revenue Service. The IRS maintained Caterpillar owes the federal government more than $2.3 billion in unpaid taxes and penalties stemming from the company’s alleged tax avoidance practice of funneling U.S. profits through the Swiss subsidiary CSARL, as of 2018. Caterpillar announced it reached a settlement with the IRS in a Form 8-K filed with the U.S. Securities and Exchange Commission on Thursday. “We have been cooperating with the government in its review of the issues and are pleased to have reached this resolution with the IRS,” said Caterpillar spokesperson Rachel Potts in an emailed statement. The settlement covers tax years 2007 through 2016 for an undisclosed sum. It also covers the “disputed tax treatment” of profits from CSARL through parts transactions, the company said in the filing.

    CSARL is its Swiss affiliate that somehow received over $1 billion in profits per year which the IRS thought should be US sourced income. Carl Levin chaired a hearing on this matter on April 1, 2014 buttressed by a very thorough report on these issues from his staff. It seems PwC could not defend what they had devised for their clients which was alarming since PwC was also their financial auditors who never warned shareholders of this tax risk. And yea there was a shareholder lawsuit. But wait there is more:

    The U.S. Department of Justice’s criminal probe into Caterpillar’s tax practices reportedly halted soon after Bill Barr became U.S. Attorney General in 2018. Barr assisted Caterpillar as a private attorney in 2017, when he was retained to assist the company in the tax case. Two Democratic U.S. Senators launched an inquiry into the “stalled” DOJ probe in April 2021. As late as March of this year, a Senate aide told WCBU there was no new information to share in relation to that inquiry.

    Translation – the government was investigating fraud but Bill Jabba the Hut Barr used his connections with the Trump Administration to get his client off.

  3. pgl

    How awful are Putin’s war crimes?

    Russian troops have raped and tortured children in Ukraine, carried out a “large number” of executions and committed other war crimes, according to a United Nations investigation by legal experts.

    Raping children is disgusting. Unless you are a Putin pet poodle like JohnH who likely gets all excited over these atrocities.

  4. ltr

    Your mother should have aborted you, you are a walking/living argument for abortion.
    Your mother should have aborted you, you are a walking/living argument for abortion
    Your mother should have aborted you, you are a walking/living argument for abortion

    [ This is profanely threatening; intolerable. ]

    1. baffling

      and ltr making false accusations of racism to quiet other bloggers is bullying, rude and threatening. please stop the bullying behavior ltr.

  5. ltr

    Raping ——– is disgusting. Unless you are a —– pet poodle like—– who likely gets all excited over these atrocities.
    Raping ——– is disgusting. Unless you are a —– pet poodle like—– who likely gets all excited over these atrocities.
    Raping ——– is disgusting. Unless you are a —– pet poodle like—– who likely gets all excited over these atrocities.

    [ This is inciting and threatening; intolerable. ]

    1. Macroduck

      Why? Because Johnny is on your side? When you condemn China’s government for its treatment of minorities, you’ll have the moral standing to criticize others. For now, you condemn a condemnation of rape and are silent about the rape.

      The only thing worse would be the act, itself.

  6. pgl

    What price should the racist governor of Florida pay for his inhumane and illegal busing of migrants to more humane states?

    Florida emergency declared as Tropical Storm Ian strengthens
    Gov. Ron DeSantis declared a state of emergency for all of Florida on Saturday as Tropical Storm Ian gained strength over the Caribbean and was forecast to become a major hurricane soon on a track toward the state.

    Look I pray that Florida does not suffer horrible misery and I am all for FEMA doing its job (even though under Trump, it told US citizens in Puerto Rico to eff off 5 years ago). I suspect Biden will due the right thing but there is part of me that wants DeSantis to suffer the fate of Puerto Rico after Maria. After all – DeSantis is a racist jerk to the core.

  7. pgl

    This is likely giving Team Trump ideas:

    KYIV, Ukraine — Officials in Russian-occupied territories in eastern and southern Ukraine were forcing people to vote “under a gun barrel,” residents said on Saturday as staged referendums — intended to validate Moscow’s annexation of the territory it occupies — entered their second day. Voting is taking place in portions of Ukraine’s Donetsk, Luhansk, Zaporizhzhia and Kherson regions and will last five days, ending Tuesday. The outcome is not in doubt.

    I can the MAGA crazies with their military assault weapons forcing people to cast their ballots for the Orange Jesus. After all – Trump and Putin are virtually the same person.

      1. CoRev

        And Chicago, Baltimore and NYC … on and on and on in Dem ?managed? locales.

        But in one commenters perception they are more humane than….

        1. Barkley Rosser

          Anonymous and CoRev,

          Really? Sorry, but I am, unaware of anybody in any US city being forced to vote at the point of a gun, especially one held by a soldier.

          Have you two completely lost your minds in your sorship of V.V. Putin? Looks like maybe ltr is also losing her mind. I guess she rejects UN reports on abuses by Russian troops because the UN also recently criticized human rights abuses in Xinjiang, naughty naught of them.

      2. baffling

        actually, the voting escapades in ukraine have similarities to texas. the intent is to reduce who is willing and able to vote, so that you get your desired democratic outcome. texas is full bore attempting to reduce the minority and democrat vote, with unconstitutional restrictions. people really should wake up and take notice of what is happening in texas. third world tactics in action on american soil. our soldiers did not fight and die so that this behavior would be protected on American soil.

  8. pgl

    Now if the Governor of Texas could eliminate all rapes – that would be awesome. But he can’t. What he can do is to make false promises to excuse his draconian law to turn women into baby factories:

    Clinics in Texas have been struggling with the demand for assisting rape victims.
    “The numbers have stayed consistently high,” a rape crisis clinic employee told The AP.
    It comes as Gov. Greg Abbott pledged to “eliminate all rapists” as a result of the state’s strict abortion law.
    Clinics in Texas say the number of rape cases has remained “consistently” high, despite Gov. Greg Abbott’s assurance that the state’s strict abortion law would “eliminate all rapists,” according to The Associated Press. Last year, Abbott pledged to eradicate rapists after signing the state’s abortion bill that bars people from getting the procedure after a fetal “heartbeat” can be detected on an ultrasound, Insider previously reported. The law has no exceptions for rape or incest — a restriction that abortion advocates and some in the GOP have condemned.

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