Unsurprisingly the UK economy grew in August.
However, it was by only 2.1%. And well over half of that came as a result of the return of the hospitality sector. Much of the rest resulted from the assumption that those in education were working again. Knock those two apparently virus spreading sectors out of consideration and the rest of the economy remained more than 9% below its previous crisis level.
What does this mean? Three things, I suggest.
The first is that the malaise in the economy is much deeper than the difficulty of getting a cappuccino suggested it to be: eat out to help out was of, overall, marginal significance.
Second, the V shaped recovery that Andy Haldane of the Bank of England likes to talk about does not exist; not that I ever thought it did.
And third, this may be as good as it gets. September is not going to be a great deal better than this. October will be worse. In that case we really are in the deep recession I have feared and predicted.
The time for tinkering is over. The belief that pulling the odd lever or two will work is now forlorn. Unless, and until, it is recognised that the neoliberal era is over and that radical government action is the only way out of this we are in this crisis and have no way out of it.
But when will that happen?
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Nothing much will change in gov’t policy.
They are only now reluctantly acknowledging the benefits of localised track and trace, whilst at the same time continuing to treat local authorities with utter contempt.
Richard,
Did you actually read the news item that you are talking about?
The ONS have helpfully produced a graph of GDP (https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/august2020) which quite obviously shows the extent of the V-shaped recovery.
Also, a 2.1% increase in GDP IN A SINGLE MONTH is a significant sign of growth. This was the fourth successive monthly increase.
If you really think a sharply flattening recovery with the country going back into lockdown is a significant sign of growth then I very politely suggest you’re stupid
Any other description is hard to find
And SHOUTING at me is a sure sign of that
Richard, the data does not show a ‘sharply flattening recovery’, not does it show that we are in recession.
Why are you so rude to people that are simply pointing out facts that you appear not to be aware of (or are deliberately misrepresenting), however inconvenient this might be?
Surely acknowledging your mistake but explaining that you either a) do not believe the figures or b) believe they are going to get much worse, but be a much more credible and professional response?
Barbara
I did not make a mistake
We are facing an economic depression (not recession) and idiots like you want to play pedantry with semantics
Do you really care so little about the real issues we are facing that you think this a good use of your time?
If so, when did you have the empathy bypass?
I think the scale on this graph is deceptive as the period Richard is talking about is four months over the the entire twelve year period covered. If you actually look at the underlying data you can see what he means – there is significant growth May-June, small growth July-Aug, and to a level nowhere near what it was in Feb. To me it feels consistent with what I am reading about in the news – an initial release of pent up demand but hospitality businesses unable to open fully, entertainment and travel very restricted, significant redundancies and administrations in retail and elsewhere etc, all things which have got only worse over the last month. I’m not an economist (merely an accountant!) but I would’ve be at all surprised to see a further flattening when the Sept numbers come out, especially if further restrictions are imposed in the North as well as Scotland.
You are spot on
I thought about downloading the excel data this afternoon and pulling out that part
And then thought that it’s so glaringly obvious that this is the case and so widely reported that these people are just trolling and nothing will satisfy them
But you are spot on
So, what we are saying is that we are giving the ‘V sign’ to the ‘V shaped’ economy?
All those in favour say ‘Aye’!
(Trust PSR to lower the tone of the proceedings again).
Let me help you out with some technical economic terms, Richard:
‘recession’
a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
The last 3 months have all shown positive GDP growth – where is this recession you are claiming?
If you are stupid enough to think we are not in recession, please feel free to think so
It does not alter the stupidity of the claim
Recession is an economic term which has a particular meaning – if you choose to abuse that meaning and pretend it means something entirely different, then you shouldn’t be surprised when people more knowledgable than you in this area, point this out to you.
It’s not abuse, it’s not trolling, it is educating your readers.
If you would to invent your own meaning to a widely understood economic phrase, you should make it clear that you have done so and not hoodwink your readers into thinking that something to be the case which is demonstrably not true.
A a professor you really should have more professional integrity than this.
I’m so sorry
Of course I should not be saying that we’re in a profound economic downturn that a statistical quirk deems to be a period of growth
What a fool I am for not going along with your denial of the truth
Let me humbly apologise for having spotted the truth
Richard P
Have you any idea what base line those GDP estimates come from?
I don’t think you have a clue do you?
Think, man!
Sorry, 3 consecutive quarters of positive growth is a ‘statistical quirk’? I think most credible economists would disagree with you!
Recessions have a strict definition – the current environment does not tie up with the economic definition of a recession. That’s 100% clear and irrefutable.
Whether you think that the GDP figures mask some underlying issues with the economy and is your (subjective) opinion – rather than insulting me simply for pointing out the truth that we are not in a recession, perhaps you might be better-placed explaining what you believe to be the actual issues and reasons for the decrease in growth?
We have not had three successive quarters of positive growth
Take a fail
As I’m sure you were aware, Richard, it was a typo – I untended to say 3 MONTHS of successive growth.
What is clear is that by standard economic definitions we are not even close to being in a recession – even the latest GDP growth of 2.1% is an annualised rate of over 28% p.a. !
Your ‘take a fail’ comment appears to be the approach of someone who won’t prepared to admit they were wrong and has to resort to insults and censorship.
You really are stupid aren’t you?
We’re 9.2% down, and clearly heading for things to get worse
But you talk of growth
Please don’t call again
More insults when you’re shown to be wrong – not very ‘Quaker’ behaviour, I wouldn’t have thought? Neither is it very professional behaviour, but it is clear for all to see what happens on here when you are shown to be wrong on a topic.
1) I talked of growth because the economy is growing and has grown for the last 3 months. Not sure why you’d deny this when this is an unarguable fact?
2) the last 3 months of growth means that we are NOT in recession – that’s basic economics. Not sure why you’d choose to deny this, when this is an unarguable fact?
3) You might think that things are going to get worse, I may or may not agree, but it irrelevant in terms of where the economy is now, which is my sole point.
You clearly do not understand how awkward Quakers are
They speak truth to power
Including those who think they are powerful and who talk utter nonsense
That’s why so many ended in prison
And by the way – it’s exactly what a good professional should so as well
You don’t understand what to be a professional is, very clearly
You’re also relying on pedantry – and you’re a fool for doing so
Richard,
You’ve repeatedly been abusive and refused to accept that your claims about currently being in a recession are fundamentally wrong. That’s just a fact – it’s not ‘semantics’.
My Christian ethos requires me to treat people with respect and not be judgemental – perhaps you have a different interpretation of the new testament (different to everyone else) just as you have a different interpretation of the term ‘recession’ compared to every other economist.
My professional ethos requires me to be respectful and explain why I believe someone’s else’s views are wrong and to explain why. Again, I think that is what most people would suggest being ‘professional’ is all about. Once again, you appear to be at odds with everyone else!
Your behaviour is totally unacceptable so i will be reporting you to City University to see what they feel about your lack of knowledge of basic economics and the way you abuse people who simply point out your mistakes. It doesn’t reflect well on their appointment of you.
You have used a wholly arbitrary rule to say we are not in a recession in the face of all the evidence
And I have c called you out
I have said you are the Emperor with no clothes
And you want to make an issue of it?
Feel free….try to find someone who thinks things are all going just fantastically right now
‘Arbitrary rule’?!
Do you genuinely not know how a recession is defined? Clue, it’s not by 3 consecutive months of growth!
And who mentioned things ‘going just fantastically right now’? That’s just your pathetic straw man argument, I claimed no such thing.
Seriously though, if you are going to comment on the economy, shouldn’t you at least understand the basic terms used?
https://www.investopedia.com/terms/r/recession.asp
https://www.forbes.com/advisor/investing/what-is-a-recession/
https://www.economicshelp.org/blog/459/economics/define-recession/
https://www.businessinsider.com/what-is-a-recession?r=US&IR=T
https://www.thebalance.com/what-is-a-recession-3306019
https://www.economicsonline.co.uk/Definitions/Recession.html
Respectfully, you completely and utterly miss the point, yet again
You were the person who used three consecutive months and three consecutive quarters to define recession, neither of which met your spec.
I did not.
And sure I know there are arbitrary conventions (not rules) on defining recession.
But are you not aware that we live in exceptional times? And that to pretend that normal conventions pervade right now is simply absurd? And that to argue when we are 9% down in February that we are not in recession is quite absurd?
Can’t you see that you are making a fool of yourself, and that in expressing what is very clearly a correct opinion that I am using what a professional person is required to do, which is to express judgement, even when that judgement conflicts with convention?
Indeed, don’t you even appreciate that doing so is what differentiates professional judgement from technical compliance? And that technical compliance is what technicians and not professionals offer?
If you don’t I feel sorry for you.
I also suggest you suggest exactly why so much is wrong in a world where professionalism is so absent.
Please feel free to be a technician. As a professional person I will us3 my judgement, and point out, robustly, how wrong you are to make sure no one is on the slightest doubt that your blind following of convention leads to foolish misstatement. That’s the sort of thing that I believe ut professional to do. If only more did so….
And that,min any case