Wednesday, 3 April 2013


by Colin Bloom (with help)

Forget triple dip, personally I'm sceptical if we ever even had a double dip!  Lies, damn lies and Orwellian politicians you all scream, the statistics say otherwise!  But do they?

Anyone who is a keen runner, will tell you that having a 'running mate', in the physical exercise sense, is better than running alone. Most runners find the co-dependancy of forcing each other to go that bit further or that bit faster is almost as good as having a dose of whatever Lance Armstrong kept in his medicine cabinet. The other advantage of a running mate is that you have hours with someone to stress test ideas with whilst you stress test your already exhausted knees and feet.
My running partner is Mr Taylor, a man who unlike me has a brain the size of Belgium and a much stronger grasp of all things economic. If the ball should ever come loose out the back of the scrum, and I should ever find myself as Prime Minister; it would be Mr Taylor who would be my Chancellor.

Last night we were well into our third mile when we agreed that far from believing there will be a 'triple dip', there was every chance that the 'double dip' never happened after all! You see Gross Domestic Product (GDP) “statistics” are like Liberal Democrats, they are unusual; you read them and believe them but for months and even years after they’re published, they can be changed. Here’s what the Office for National Statistics ONS have said about GDP recently.

I. The ONS calculated their “preliminary estimate” of the GDP for Q4 2011 as a -0.2% fall and published this in January 2012.

II. The following quarter, the ONS calculated their “preliminary estimate” of GDP for Q1 2012 as a -0.2% fall thus technically completing the definition of a recession as two quarters of declining GDP. At the same time they also announced that they had “revised” their previous estimate of the Q4 2011 GDP as -0.3%.

III. In July 2012, the ONS published their preliminary estimate of GDP for the next quarter, Q2 2012. This was the big one as GDP was estimated to have fallen significantly in that quarter with a published change of -0.7%, this also completed three successive quarters of GDP decline and seems to put the nail in the coffin of George Osborne’s fiscal rectitude.  At the same time though both of the previous 'quarters' “estimates”' were revised, Q4 2011 was revised downwards to -0.4% and Q1 2012 was also revised downwards to -0.3%.

Now at the time there was significant commentary from various esteemed economists who didn’t believe these figures (other than that David Blanchflower fella who screamed schadenfreude); the general consensus was that the economy was growing marginally and was flat at worst.  But the point to note is that those statistics keep changing and so the intelligent question to ask is where are they now?

IV. The latest GDP figures were published last week, they can be read here (table A2 on page 45, Chained Volume Measures). The BBC provided a helpful commentary and chart on them which can be found here.

There are two key points to note:

I. The latest revision of the GDP figures has them as:

Q4 2011:               -0.1%
Q1 2012:               -0.1%
Q2 2012:               -0.4%

II. These figures were revised versus the previous publication three months earlier which showed:

Q4 2011:               -0.3%
Q1 2012:               -0.2%
Q2 2012:               -0.4%

So all that is needed for George Osborne’s “double dip recession” to be erased from history is for one number to change. If Q1 2012 is revised to 0% then bingo - no double dip.

That isn't to say all things in the economic race track are going as fast as want, but like Mr Taylor and I, we're headed in the right direction.

Obvious credit to some of the technical data here goes to Mr. Taylor.


Ian Baxter said...

Do you know how these stats are compiled? By requiring all companies to submit turnover information. Turnover information is not as exact a science as may first be thought. The stats also rely on all companies to submit accurate and timely data. I reckon the GDP stats aren't accurate to within 1% let alone 0.1%.

Anonymous said...

The mainstream press is catching up with you:

Never mind the triple-dip recession, the double dip may have been an illusion too