Hugh Small is an independent economic analyst and management consultant, who was formerly with US-based firms Arthur D. Little and A. T. Kearney. He blogs at mature economy.org, and has a running thesis that mature economies must be assessed differently to developing economies because they share very different strategic goals. Furthermore, once you factor in the subtle differences that apply to developed economies, things like the UK productivity puzzle begin to look a little less mysterious.
The top par of the release: Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.
The preliminary UK GDP estimate for the fourth quarter is out and it looks like there’s been a return to err.. contraction. Via the ONS: GDP was estimated to have decreased by 0.3% in Q4 2012 compared with Q3 2012. Output of the production industries was estimated to have decreased by 1.8% in Q4 2012 compared with Q3 2012, following an increase of 0.7% between Q2 2012 and Q3 2012.
China’s GDP grew 7.8 per cent in 2012; the slowest full-year of growth in 10 years, as the FT points out. However the figure for Q4 was 7.9 per cent; a little above the consensus for 7.8 per cent. This was the first quarterly increase after seven straight quarters of decline, so it’s probably going to be seen as turning point after which China gets back towards the 8 per cent-plus growth that most forecasts are anticipating.
Gary Jenkins of Swordfish Research aspired to have more thoughts on the latest Greek debt deal by Wednesday morning. Alas, it was not to be: I was hoping that having had a further twenty four hours to digest the Greek debt sustainability plan that I would have a lot to add to yesterday’s comments, but I don’t. There have been press reports (FT) that the measures to be implemented will only bring the debt/GDP figure down to 126.6% rather than the 124% announced but I think by now we are all used to the initial figures released being subject to revision pretty quickly. We agree — the figures around Greece always come with implied aspiration.
Credit Suisse economists have updated their “Missing GDP” chart (prior edition here), now showing the average contribution to real GDP growth of each subcomponent in the first thirteen quarters of the last six US recoveries, and then comparing them against the corresponding contributions in this one.
We pointed out just before China’s third quarter GDP figures were released that there is much strangeness around its quarterly growth data generally*. While most countries release an annualised, seasonally-adjusted quarter-on-quarter figure, China publishes a year-on-year figure and, only since 2011, a seasonally-adjusted but unannualised quarter-on-quarter figure. This causes three problems: - the headline number is not directly comparable with most other countries’ quarterly GDP figures. - when a comparable number is generated (ie, when QoQ is annualised), the Q1 & Q2 2012 are FAR below the headline YoY numbers… the most striking example being 6.6% for the first quarter of 2012.
China’s Q3 GDP data is out on Thursday, and there’s naturally a lot of speculation about whether it will show yet another quarter of declining growth (almost certainly) and whether it will even fall below the official 7.5 per cent target, (quite possibly). However the numbers revealed won’t be suitable for an apples-for-apples comparison with most other countries. In fact, they’ll barely be suitable for comparison with previous Chinese GDP numbers.
The British government ran a campaign during the Olympics promoting how GREAT Great Britain is. It wasn’t the most subtle of messages, but a fitting promo for The Bearded One. Most bases were have covered, from heritage to innovation to shopping. The one thing they missed is the economy.
Germany and France both beat expectations for GDP growth in the second quarter, while the eurozone and wider group of 27 European countries saw an anticipated quarter-on-quarter contraction of 0.2 per cent. The figures, released on Tuesday morning, revealed some resilience in the German economy, with 0.3 per cent growth. Economists had expected the quarter-on-quarter figure to come in at 0.1 per cent.
If you thought Moody’s and the IMF’s cuts were bad check out Morgan Stanley: We make substantial downward revisions to our UK GDP growth forecasts from 0.5% and 1.8% GDP in 2012 and 2013, respectively, to -0.5% and 1.0%. In terms of GDP growth, our new central case is now very similar to our previous bear case…
The U.K. economy has been flat for nearly two years. This stagnation has left output per capita a staggering 14 percent below its precrisis trend and 6 percent below its pre-crisis level. Weak growth has kept unemployment high at 8.1 percent, with youth unemployment an alarming 22 percent. The effects of a persistently weak economy and high long-term unemployment can reverberate through a country’s economy long into the future—commonly referred to by economists as hysteresis.
A warning to Great Britain from UK-based investment fund Hinde Capital (a hedge fund that specializes in precious metals): We wish to outline the gravity of the situation in which the UK finds itself, and by assessing how we got here we can begin to offer our solutions both for monetary and political reforms. Unfortunately we are deeply concerned that far from being cynics or purveyors of doom, the very harsh reality is that the UK is caught in an intractable spiral of negative outcomes.
Real gross domestic income (GDI), which measures the output of the economy as the costs incurred and the incomes earned in the production of GDP, increased 2.7 percent in the first quarter, compared with an increase of 2.6 percent in the fourth. For a given quarter, the estimates of GDP and GDI may differ for a variety of reasons, including the incorporation of largely independent source data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of change. By contrast a 0.3 percentage point, or $11.4bn, fell off the US economy in the first quarter, according to the BEA’s ‘second’ estimate of real GDP. The annual rate rose 1.9 per cent instead of the first-estimate 2.2 per cent.
The German economy grew five times faster than expected in the first quarter of the year, jumping 0.5 per cent. Admittedly expectations were for only 0.1 per cent growth but still, tis cheering news on a wet London morning – particularly considering the 0.2 per cent hit German GDP took in the last quarter of 2011. The year on year increase was 1.7 per cent, beating expectations of a 0.8 per cent jump, and the German statistics office said growth was supported by an increase in net trade as exports to outside the eurozone gained.
The China GDP figures change little in terms of the choose-your-own-adventure thing happening with China. Yes, the 8.1 per cent growth for Q1 was lower than consensus forecasts of 8.3 or 8.4 per cent. But no, it’s not causing the bears to rejoice. Witness this from Nomura strategist Zhiwei Zhang, who’d forecast a well-below-consensus 7.8 per cent:
So much for the Okun’s Law mystery? Those who think Gross Domestic Income, whose first quarterly estimate arrived in the same release the third estimate of GDP, is the more useful growth measure of the two will be encouraged by this:
Accelerating recovery or a winter head fake? Who knows, but the advance estimate for Q4 real GDP growth was 2.8 per cent after third quarter growth of 1.7 per cent. Consensus expectations were for 3 per cent growth: Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.8 percent in the fourth quarter of 2011 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.
China’s economy expanded 8.9 per cent in the fourth quarter of last year, extending a slowdown that began at the start of 2011 and is expected to continue into 2012, the FT reports. “In terms of the domestic and international situation, 2012 will be a year of complexity and challenges so we should be fully prepared,” said Ma Jiantang, spokesman for China’s National Bureau of Statistics, as he unveiled the latest figures for the world’s second-largest economy. China entered 2011 with its government focused on reining in soaring inflation and gross domestic product surging 9.7 per cent in the first quarter from a year earlier. Thanks mostly to government attempts to cool growth and rein in stubbornly high price rises, quarterly GDP growth fell to 9.5 per cent in the second quarter of 2011 and 9.1 per cent in the third.