For years, the UK has added more jobs than almost any other country in the rich world even as real incomes plunged thanks to underwhelming productivity growth. Now it seems that a new burden has been added: disinflation. Prices are just 0.5 per cent higher than a year ago.
The BBC’s Robert Peston worries that this “is not much of a buffer against deflation” and that “if we became accustomed to prices falling as the new norm, we would spend less – in that delaying would always make our money go further. And then the economy would sclerotic and stagnant, and desperately difficult to reinvigorate.” Given that UK household debt is already staggeringly high relative to income and projected to rise much further, that could pose serious problems down the road. Read more
That’s from an essay by David Blanchflower and Stephen Machin. Read more
The Resolution Foundation has published its annual look at UK standards of living, and what a brightly coloured chartfest of post-recession misery it is indeed.
It’s an attempt to provide an accurate picture of income distribution, addressing some flaws in the official statistics. But the central message is that not just the middle, but everyone outside the top 1o per cent has seen their share of economic gains squeezed. Read more
This is is a guest post from Philip Pilkington, a writer and research assistant at Kingston University.
After a few days of volatility the S&P 500 rebounded on the back of better than expected jobs data last Friday. Meanwhile the Nikkei, the decline of which the previous week seems to have precipitated the shakiness in the S&P 500, started to stabilize on Monday. And so the classic question rears its head once more: do stock markets drive the economy or vice versa? Read more