Tuesday, January 25, 2011

On Today's GDP Figures

I was quite shocked at todays economic growth statistics, I was personally suspecting something to towards the lower end of what was forcasted, maybe 0.2-0.3% growth, a 0.5% drop was a shocking number.

More worrying is the cause of this drop, some of it may be down to the snow, but I'd have thought that would have been factored into the independent estimates. In addition, the government's programme of cuts hasn't really started to bite just yet.

There remains the possibility that todays figure is an anomaly, the result of incomplete data or a mistake in the calculations but otherwise it would seem that the drop is driven almost entirely by a collapse in confidence. I find this very worrying.

I've always thought that the current economic recovery was uncertain, mainly on account of the large levels of consumer debt. If the recovery is so uncertain that it can be knocked of course by nothing more than the expectation of cuts we have serious reasons to be afraid.

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