GDP Q1 Forecast +0.4%

Blacklight

Also some commentary from the Telegraph:


Growth figures expected to spare Labour a double-dip nightmare

Economic growth figures published this week are expected to spare Gordon Brown the political nightmare of a double-dip recession just two weeks before the election.

Economists are forecasting a 0.4pc increase in gross domestic product (GDP) in the first quarter, driven by expansion in industrial output, in data to be published by the Office for National Statistics (ONS) on Friday.

grubby23

Who cares about economic growth of 0.4pc when we are in debt that can only be repaid by inflationary means. Thank you Blair & Brown that our money wont be worth anything in a few years!

CLAPTON

well, if it turns out to be so then although modest it will save some people from un-employment and provides a better base on which to build further growth.

michaels

Except that given typical levels of productivity growth the economy needs to grow by more than 2% to maintain the same level of employment so 1.2% annual rate still equates to job cuts of about 1% of the working population all things being equal. (Don't worry I am sure it won't show up in the unemployment figures just in part time working and non-particiaption rates which are easily glossed over by a world class spin machine - see, the UK does still lead the world in one area: spin[Hi Liz])

CLAPTON wrote: »

well, if it turns out to be so then although modest it will save some people from un-employment and provides a better base on which to build further growth.

Blacklight

michaels wrote: »

Except that given typical levels of productivity growth the economy needs to grow by more than 2% to maintain the same level of employment

Can you expand on that a bit? What are typical levels of productivity growth, how is it measured, how does it link to GDP and how can you extrapolate to 2% from it?

StevieJ

michaels wrote: »

Except that given typical levels of productivity growth the economy needs to grow by more than 2% to maintain the same level of employment so 1.2% annual rate still equates to job cuts of about 1% of the working population all things being equal. (Don't worry I am sure it won't show up in the unemployment figures just in part time working and non-particiaption rates which are easily glossed over by a world class spin machine - see, the UK does still lead the world in one area: spin[Hi Liz])

Talking about spin I make that 1.6% GDP

nollag2006

StevieJ wrote: »

Talking about spin I make that 1.6% GDP

Good to see that unemployment didn't rise to the levels that many of the bears had hoped for on here.

2010 will be a tough year, with little growth but 2011 and 2012 are predicted to be a lot lot stronger.

http://business.timesonline.co.uk/tol/business/economics/article7100850.ece

Generali

Blacklight wrote: »

Can you expand on that a bit? What are typical levels of productivity growth, how is it measured, how does it link to GDP and how can you extrapolate to 2% from it?

I came across the same figure when studying economics. It's based on empirical data: growth in GDP>2% is consistent with falling unemployment. GDP growth <2% is consistent with rising unemployment generally. It's certainly not a hard and fast rule, just an observation of past events.

StevieJ

Generali wrote: »

I came across the same figure when studying economics. It's based on empirical data: growth in GDP>2% is consistent with falling unemployment. GDP growth <2% is consistent with rising unemployment generally. It's certainly not a hard and fast rule, just an observation of past events.

So based on these figures we expect rising unemployment in 2010 and a strong recovery in 2010-2011. It is normal for unemployment to continue rising well into the recovery stage so no real shocks in that.

michaels

Oops - never claimed maths was my strong point and boviously 1.6% suggests a smaller output gap and thus smaller impact on employment than I was suggesting above - my bad.

In terms of the employment/growth relationship their tends to be a lag as companies try to avoid laying off staff in a downturn by reducing hours, freezing pay etc when output tends to fall more than employment (= productivity falls) and at the start of the upswing employers can utilise some of this 'spare' labour before hiring (reinstating hours, overtime etc) which in the uncertain times following a downturn feels safer than taking on new staff only to have to let them go if things are not as rosy as hoped for - hence another lag.

The sharp divergence between unemployment and output in the recession is of course to be welcomed but it appears that the reduction in employment is more closely matched to the change in output than unemployment via changes in participation rates (like in previous recessions where there was lots of early retirement, going on the sick, becoming a student, working part time, becoming discouraged etc).

StevieJ wrote: »

Talking about spin I make that 1.6% GDP

michaels

Anyone want to make a guess against the 0.4% - Jan was very weak on consumption with less sales activity following a better than expected xmas and the weather that continued to an extent in to Feb. No real feeling on the other components of GEP - services? Industrial production etc but having had the recent upwards revisions I suspect the inital headline could be less tan 0.4% even if it eventually ends up at that value. My guess a politically slightly Labour favouring (well I am sure the BBC will hail it) 0.2%