With David Cameron’s too broad hint of good news on the way to Labour’s obvious disappointment at a better-than-expected figure, the GDP numbers have become a political football as well as the nearest thing the Office for National Statistics has to a sexy announcement.
It would be inconsistent of me not to say these preliminary figures are prone to revision. When they are unexpectedly weak, as in the second quarter, the expectation is that they will be revised up, as they were.
Given the 1% third quarter rise in GDP exceeded expectations, the risk this time is on the downside, though the ONS does not appear to have made unrealistic assumptions for what it does not know about the third quarter (most of September) and the story the figures tell is quite a logical one.
So, taking the second quarter’s 0.4% fall and the third quarter’s 1% rise together, you have a 0.6% GDP rise over six months. Part of that, 0.2%, was the ONS’s treatment of Olympic ticket sales. The remaining 0.4% splits into 0.2% underlying growth in each of the two quarters, which does not look to be stretching things too much.
In the fullness of time, of course, there will be many further revisions to the numbers. I would expect the double-dip from which we have just emerged to be exposed as phony, revised to become more consistent with far stronger job numbers. But we may have to wait years for that.
Even on the figures we have, the economy is not as weak as we thought. Since turning in mid-2009, overall GDP has risen by 3.3%, and is less than 3% below its pre-crisis level. Excluding the depressed North Sea sector, the economy is up 4.4% from its 2009 lows.
The big question, following on from last week, is whether the economy can maintain momentum after this 1% boost.
My regular column is available to subscribers on www.thesundaytimes.co.uk This is an excerpt.
This post was originally published at David Smith’s Economics UK and is reproduced here with permission.
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