Ignore the gloom-merchants: The UK’s investment-led recovery is sustainable

HAMISH_MCTAVISH

Companies spent an additional £32bn on new investment in 2015 compared to the same period six years ago. In percentage terms, this was by far the fastest growing sector of the economy, up by 26 per cent. By contrast, consumer spending grew by only 10 per cent, less than the economy as a whole. It has been an investment-led recovery, with the role of public spending negligible.

Peak output prior to the Great Depression was in 1929. In his sample of countries, only just over a half had regained this level by 1937. This time round, taking the same group of economies, 80 per cent of them have a higher GDP than in 2007.

In contrast, GDP in the G20 economies has risen by 24 per cent since 2007, the last year before the recession began. And they account for around 85 per cent of world output. The economic discourse is disconnected from reality.

http://www.cityam.com/231763/ignore-the-gloom-merchants-the-uks-investment-led-recovery-is-sustainable

cells

Totally agree, the way I put it to others is that the world is very rapidly building out the infrastructure that makes peoples lives richer and easier. The roads and railways ports and airports hospitals factories and commercial businesses and of course the homes.

What some asset managers computer screen in London or NY says the value of shares was today vs two days ago is not going to un-build all that infrastructure and knowledge and wealth its here to stay

Graham_Devon

That would seem a rather bizzare way of measuring how we are doing, considering the massive differences between the depression in 1929 (and how they dealt with it) and the recession of 2007 and how the world dealt with that.

I like how this opinion piece is written by the author of "positive thinking" books. I guess we'd have to expect no less than a positive outcome from his opinion!

HAMISH_MCTAVISH

Graham_Devon wrote: »

piece is written by the author of "positive thinking" books.

The author, Paul Ormerod, is an economist at Volterra Partners, and a visiting professor at University College, London.

A bit more than just "positive thinking books"... :rotfl:

Graham_Devon

HAMISH_MCTAVISH wrote: »

The author, Paul Ormerod, is an economist at Volterra Partners, and a visiting professor at University College, London.

A bit more than just "positive thinking books"... :rotfl:

He's someone we've likely all never heard of, until now....

Just making the point that you are hardly going to see a negative opinion piece from an author of positive thinking books!

Maybe we could look at my point on the differences between the two recessions, otherwise were in danger of assuming all recessions and all actions to deal with the recession are the same.

Of course they are not, so of course you are going to get differing outcomes.

What is clear about the 1929 recession is that any growth 6 years on was sustainable (this is evidenced!), whereas by all accounts, it seems not quite so sustainable today (again, as evidenced as soon as stimulus isn't mentioned for a week).

Mistermeaner

Don't confuse share prices with economic recovery

mayonnaise

Graham_Devon wrote: »

I like how this opinion piece is written by the author of "positive thinking" books. I guess we'd have to expect no less than a positive outcome from his opinion!

Graham_Devon wrote: »

Just making the point that you are hardly going to see a negative opinion piece from an author of positive thinking books!

Pssst...it's Positive Linking.
http://www.amazon.co.uk/Positive-Linking-Networks-Revolutionise-World/dp/0571279201

Generali

Graham_Devon wrote: »

He's someone we've likely all never heard of, until now....

Just making the point that you are hardly going to see a negative opinion piece from an author of positive thinking books!

Maybe we could look at my point on the differences between the two recessions, otherwise were in danger of assuming all recessions and all actions to deal with the recession are the same.

Of course they are not, so of course you are going to get differing outcomes.

What is clear about the 1929 recession is that any growth 6 years on was sustainable (this is evidenced!), whereas by all accounts, it seems not quite so sustainable today (again, as evidenced as soon as stimulus isn't mentioned for a week).

He's not an author of positive thinking books. I think you're looking at a title of a book he wrote and are getting in a muddle:

http://www.amazon.com/Positive-Linking-Networks-Revolutionise-World/dp/0571279201

The book is about network effects and is called Positive Linking not Positive Thinking.:p

I've heard of him a bit before. This multi-disciplinary approach is quite popular now and can be seen in things like behavioural economics, Nick Taleb's work on unpredictability and people like Prof Ormerod looking at non-linear feedback effects.

1929 was a classic example of non-linear feedback. Share prices fell which was fine for a while until falling prices hit a critical level when margin traders started to be forced by their brokers to sell. At that point, the system started to feed back on itself in an unpredictable way as sales forced further sales. Banks went bust which exacerbated problems.

Other examples of non-linearity include membership (or more pertinently use) of social media and other communications technology. Once a social media platform reaches a critical mass it becomes worth everyone using it. There's little point being the only person in the world with a telephone or an email address!

CLAPTON

Graham_Devon wrote: »

That would seem a rather bizzare way of measuring how we are doing, considering the massive differences between the depression in 1929 (and how they dealt with it) and the recession of 2007 and how the world dealt with that.

I like how this opinion piece is written by the author of "positive thinking" books. I guess we'd have to expect no less than a positive outcome from his opinion!

never likely to get any positive thinking from this source.

Mistermeaner

CLAPTON wrote: »

never likely to get any positive thinking from this source.

What makes you happy Clapton?

Thrugelmir

Trouble is these large new infrastructure projects are all foreign owned. As is the case with London Gateway. Nor do they generate vast numbers of new jobs as highly automated. Investment needs to be across a broader base and generate jobs in smaller innovate companies which will create a skills base for the future.