Uk 1q gdp drop largest quarterly decline since 1958

geoffky

these figures are frightening.....greens shoots....oh yes i can see them..these are depression figures..

zappahey

Generali wrote: »

That's too big an assumption even for an economist to make IMO. If GDP falls by 5% then what we need to look at is what are the components of the fall.

Maybe you can confirm this but I have a vague recollection of reading that GDP had to grow at around 2% per annum just for employment to stand still, given the efficiencies gained through new technologies, etc.

StevieJ

zappahey wrote: »

Maybe you can confirm this but I have a vague recollection of reading that GDP had to grow at around 2% per annum just for employment to stand still, given the efficiencies gained through new technologies, etc.

Presumably investment on new technology goes on the backburner in a recession, I think efficiencies will now come from elbow grease, i.e. less bodies:eek:

StevieJ

amcluesent wrote: »

England is rapidly becoming a banana republic without the bananas.
I'd get ahead of the crowds and start gleaning in t'fields on t'slag-heap now.

Have you not left yet

Generali

zappahey wrote: »

Maybe you can confirm this but I have a vague recollection of reading that GDP had to grow at around 2% per annum just for employment to stand still, given the efficiencies gained through new technologies, etc.

That was what I was taught as an economics student in the early 90s. I have read claims that the figure is now closer to 2.5% due to higher levels of immigration. I have no idea if that is true however. One of the reasons for growth to be required to maintain employment is depreciation - old worn out stuff needs to be replaced for things to remain the same!

As a footnote, it is worth remembering that rising immigration (in non-crisis situations) usually increases GDP growth so a higher figure for growth is both needed and more attainable for unemployment to remain static.

michaels

Agree 100% with all of this.

I was just doing a very quick 'back of the envelope' calculation to give an order of magnitude - we can all produce a list covering sectoral productivity, net migration, changes in population structure, early retirement and invalidity benefit, labour hoarding, short time working, shadow economy etc that means that headline benefits claimants will not change to the same degree but I think it is a good starting point for what might happen to employment over the next few quarters.

Generali wrote: »

That's too big an assumption even for an economist to make IMO. If GDP falls by 5% then what we need to look at is what are the components of the fall. Falls in labour intensive industries (eg services) will cause higher rises in unemployment than those in more productive areas of the economy (eg financial services and 'industry').

Also, changes in unemployment aren't the same thing as changes in employment. For example, a migrant from a country who has lost his job and has the right to come and go to and from the UK might decide to ride out the recession in their cheaper home country (their home country is likely to be cheaper unless they're from Scandinavia or Germany IME).

It is my belief that the hardest hit sectors so far have been industry and financial services so the fall in employment will be less than the fall in GDP. If people cut back hard on consumption (perfectly possible) than unemployment could rise much more quickly than seen hitherto.

GDP is just everything added together - it's consumption + investment + Government spending + exports - imports. If you want to understand what is happening to the economy as GDP falls you need to understand what is happening to each of those things.

Australia avoided being officially in recession despite the economy here being pretty bloody. The reason? Consumers have cut back spending so much on imported luxuries that the drop in imports is enough to more than offset the drop in the other components of GDP. In other words, things are so dreadful, GDP actually rose!

Graham_Devon

kennyboy66 wrote: »

Graham, I am not trying to make you look daft and have it both ways, but you have befuddled yourself. If the recession looked like this;

Q3 2008 995 -0.50%
Q4 2008 976 -1.90%
Q1 2009 953 -2.40%
Q2 2009 945 -0.80%
Q3 2009 946 +0.01%

It would mean the recession ended in Q3. Thats just the way the definition of a recession goes. It would not take away from the fact that if you measured the economy over 1/2 a year or a full year, that the performance would be dire.

Likewise, we could have 16 further quarters of growth of 0.3% per quarter, by the end of which we would only be back to 1000 GDP which we started with.

Thus you could then say that at the end of 5 1/2 years the economy was no bigger than at the starting point.

I'm trying to help here, perhaps have a coffee and engage your brain before you post a follow up.

Ok fine, so is the other thread wrong?

I don't want to quote from it as it looks childish, but mitchaa stated that if we have one quarter which is less "bad" the quarter before it, that officially is the end of the recession.

You stated, thats the rules.

A fair few others concurred.

You have quoted what I stated, about quarter 1 being -1.9% and (for example) quarter 2 being -1.8% that would be the end of the recession. You posted after agreeing.

So yes, I'm totally confused.

Either it is or it isnt.

The other thread quite simply states you do not need to be ABOVE 0.0% to be out of recession.

I'm not nit picking I want a proper answer as don't wanna make myself look stupid with this again!

inspector_monkfish

Graham_Devon wrote: »

but mitchaa stated

there lies the problem......;)

Graham_Devon

inspector_monkfish wrote: »

there lies the problem......;)

After re-reading the thread, in which everyone agreed, it looks like people are talking about two different things.

Kenny for example says positive growth. Mitchaa states negative growth, just less negative than the previous quarter. Someone else says that IS growth, i.e. -2.1% one month, and -1.9% the next = 0.2% postive growth.

Kenny then says thats the rules, and generali does too.

So thats where I was confused. Does quarter 1 at -2.4 and quarter 2 at 1.9 mean 0.5% growth? The telegraph seems to concur.

That's the key to this whole thing and re-reading the thread it looks like everyone is looking at it different but stating thats correct to the first post? I.e it would be 0.5% growth (as you have to grow from the bottom) and therefore end of the recession.

If I could get this cleared up it will really help!!

System

Urgh, I just re-read the old thread, everyone there is saying the same thing as here:

If GDP falls by 5% for 2 consecutive quarters and then rises by 0.1% in the third quarter that is supposed to be good news. Well I ain't buyin' it.

+0.2% in April
+0.1% in May

Even if June posts a 0.29% drop next month, the recession will still be classed as over as it's based around 1/4 growth.

etc etc.

Really not sure what the argument is here. The definition of recession is all over the net and wikipedia as well.