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thecrashingisles

Uk Economy Contracted 2.4% In First Quarter

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So let me get this straight in my mind.

The chancellor said the economy would shrink by 3.5% this year.

A few days later we heard that the 1st quarter showed a contraction of 1.9%

That -1.9% figure has now been revised to -2.4%!!

Some recovereh!

I dont really like Andy Murray, but for the good of the british economy I hope he wins Wimbledon. He must surely be our best hope until Broon and his gang of chancers, thieves, charlatans and outright liars are removed from office thus preventing them from any further deceit, economic incompetence, lustful spending and financial chicanery. :rolleyes:

Edited by Nick Dastardly

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More significant than the blip in housing index. Also, teh current account is stubbornly worse than expected - it just does not seem the UK is ready to finish the consumption spree yet? The pound has been weaker for quite a while now, one would expect it to finally feed into trade balance, but no...

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This is huge! - are we aiming for a double-digit contraction over the year then?

I might have to nip down to Tesco to get some tin foil..

PS - Am I getting cynical, or is the timing of this release (just after the "good" house prices news) a little bit suspect?

(edited for PS)

Edited by southmartin

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So let me get this straight in my mind.

The chancellor said the economy would shrink by 3.5% this year.

A few days later we heard that the 1st quarter showed a contraction of 1.9%

That -1.9% figure has now been revised to -2.4%!!

Some recovereh!

There could be an element of "getting all the bad news out at once".

New CEO's do this all the time, get the bad news out of the way in one big lump and then drip feed the good news.

Revising GDP down from a negative number to a bigger negative gives the government more scope for a statistical rebound later in the year.

Or we're in for > 6% contraction in GDP this calendar year. I dunno...

Edited by ItsColdUpHere

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There could be an element of "getting all the bad news out at once".

New CEO's do this all the time, get the bad news out of the way in one big lump and then drip feed the good news.

Revising GDP down from a negative number to a bigger negative gives him more scope for a rebound...

there won't be any rebound this time & it will be very, very cold up there when this 100 year super cycle depression hits.

edited - oooh, that edit saved yer ar5e there..... :D

Edited by grumpy-old-man-returns

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How big would the contraction have been if the Govt hadnt been spending money like it's going out of fashion?

Can anyone provide any info re:- the actual size of the decrease in £'s and also how much extra Gordo and co have spent this year compared to last year in order to limit the size of the falls?

Edited by Nick Dastardly

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What's this annualised?

The tax revenue must be taking a massive hit. What's the correlation between GDP and tax receipts is there an equal decline or is it more complex than that considering GDP is a bit of a made up number?

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Real household disposable income fell by 2.4% in Q1.

Q1 2009 savings ratio 3% (was 4% in Q4 2008).

They must be spending it all on increased house prices.

Seriously, how can anyone still think the housing market has bottomed. EVERYTHING is FUBAR

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How big would the contraction have been if the Govt hadnt been spending money like it's going out of fashion?

Can anyone provide any info re:- the actual size of the decrease in �'s and also how much extra Gordo and co have spent this year compared to last year in order to limit the size of the falls?

I was thinking about that too. Very rough estimate is the UK annual gdp is £1.6 trillion. So quarterly is £400 billion.

The increase in the deficit is probably £160 billion and QE at £150 billion. Aka £40 billion per quarter.

Soo the fall at the current pace is a 10% contraction annualized(depression level). QE is another 10% of the economy basically. So we'd be looking at an epic 20% fall without the QE.

My personal plan all along I have been advocating was QE on the scale of £350-£400 billion a year, all funding fiscal deficits. That would put us into positive growth territory. China's stimulus is actually large enough that they are well into positive growth territory, although its easier for them to get there.

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Guest theboltonfury
This is huge! - are we aiming for a double-digit contraction over the year then?

I might have to nip down to Tesco to get some tin foil..

PS - Am I getting cynical, or is the timing of this release (just after the "good" house prices news) a little bit suspect?

(edited for PS)

Just see which one fills up half the 6 0'clock news. It won't be houses.

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I was thinking about that too. Very rough estimate is the UK annual gdp is £1.6 trillion. So quarterly is £400 billion.

The increase in the deficit is probably £160 billion and QE at £150 billion. Aka £40 billion per quarter.

Soo the fall at the current pace is a 10% contraction annualized(depression level). QE is another 10% of the economy basically. So we'd be looking at an epic 20% fall without the QE.

My personal plan all along I have been advocating was QE on the scale of £350-£400 billion a year, all funding fiscal deficits. That would put us into positive growth territory. China's stimulus is actually large enough that they are well into positive growth territory, although its easier for them to get there.

China's Banks Are An Accident Waiting To Happen To Every One Of Us

Not convinced what China is doing will help in the long term and be sustainable, it may not even make it to the medium term.

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In the light of the annual GDP revision I've updated the graphic that shows the slight miss the BoE made with its growth predictions in the May 08 Inflation Report.

IRGDPfan0508X2.gif

These are the people who are expanding the monetary base by a factor of 7 and are confident they know what they're doing. ;)

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Rightmove has over 900,000 properties listed for sale. At best, approximately 30k can expect to sell this month. That is 1 in 30. The other 29 have to hope to get lucky next month.

A little OT, but your quote here intrigues me. I don't doubt it is true, but what instantly jumped into my mind was that I would love to see a graph of this ratio over the years.

Does anybody know where I might be able to get the rightmove data for how many properties they had listed in any one month?

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In the light of the annual GDP revision I've updated the graphic that shows the slight miss the BoE made with its growth predictions in the May 08 Inflation Report.

IRGDPfan0508X2.gif

These are the people who are expanding the monetary base by a factor of 7 and are confident they know what they're doing. ;)

Please stop trying to make the BoE look like idiots.

Your mocking of their predictive ability helps no one.

:lol::lol::lol:

That's one hell of a scary graph.

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I was thinking about that too. Very rough estimate is the UK annual gdp is £1.6 trillion. So quarterly is £400 billion.

The increase in the deficit is probably £160 billion and QE at £150 billion. Aka £40 billion per quarter.

Soo the fall at the current pace is a 10% contraction annualized(depression level). QE is another 10% of the economy basically. So we'd be looking at an epic 20% fall without the QE.

My personal plan all along I have been advocating was QE on the scale of £350-£400 billion a year, all funding fiscal deficits. That would put us into positive growth territory. China's stimulus is actually large enough that they are well into positive growth territory, although its easier for them to get there.

Thanks for that?

Another question for everyone.

What account is taken for inflation when measuring GDP growth?

I guess the real question I am asking is:-

Last summer inflation was running at about 5%

GDP growth was 0%

Does this mean that there was about 5% less economic output in the 12 months between summer 07 - summer 08 but the values remained the same due to inflation?

If so, just how long has economic output been falling?

Am I barking up the wrong tree here or is there something in this? I have further questions / concerns but would like establish the validity of the above before continuing.

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