Gdp Rose 0.8 Percent On Quarter And 2.6 Percent Yo Y

[Realistbear]

http://uk.biz.yahoo.com/25082006/325/consu...er-economy.html

Consumers power economy

LONDON (Reuters) - Increased consumer spending pushed economic growth to its quickest rate in two years in the second quarter of 2006, official data showed on Friday.

The Office for National Statistics said GDP rose 0.8 percent on the quarter and 2.6 percent on the year, unrevised from the initial estimate and in line with forecasts.

The figures are likely to keep intact expectations the Bank of England will raise interest rates again before the end of the year, particularly as price pressures picked up strongly.

The implied deflator rose by 1.5 percent on the quarter, its biggest jump in 15 years.

Consumer spending (borrowing) now behind our wealth creation?

Merv will be a busy little bee next month.

[I Told You So]

The implied deflator rose by 1.5 percent on the quarter

Whats that then?

[OnlyMe]

Industrial production FELL 0.2%.

Let the bankers rule the roost and you will be left potless and homeless.

[Realistbear]

The implied deflator rose by 1.5 percent on the quarter

Whats that then?

A measure of inflation. 1.5 X 12 months = 6%

GDP deflator which is based on calculations of the gross domestic product: it is based on the ratio of the total amount of money spent on GDP (nominal GDP) to the inflation-corrected measure of GDP (constant-price or "real" GDP). (See real vs. nominal in economics.) It is the broadest measure of the price level. Deflators are also calculated for components of GDP such as personal consumption expenditure.

GDP deflator

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In economics, the GDP deflator (implicit price deflator for GDP) is a measure of the change in prices of all new, domestically produced, final goods and services in an economy. GDP stands for gross domestic product, the total value of all goods and services produced within that economy during a specified period.

The GDP deflator is not based on a fixed market basket of goods and services. The basket is allowed to change with people's consumption and investment patterns. Therefore, new expenditure patterns are allowed to show up in the deflator as people respond to changing prices.

Edited August 25, 2006 by Realistbear

[Killer Bunny]

The implied deflator rose by 1.5 percent on the quarter, its biggest jump in 15 years.[/b][/indent]

Consumer spending (borrowing) now behind our wealth creation?

Merv will be a busy little bee next month.

Unlikely to alter IRs until November - changes normally come in same month as inflation report

But amazing nonetheless

[I Told You So]

6.0% inflation, oh dear

Merv "listen Gordon if we dont raise rates inflation will get out of control £ will collapse and the BoE will be the laughing stock of the financial world, so tough"

This makes my prediction of 6.25% base rate look quite plausible

[Realistbear]

BBC spin:

http://news.bbc.co.uk/1/hi/business/5284720.stm

Consumer spending lifts UK growth

A rise in consumer spending helped the UK economy grow at its fastest rate in two years, Office for National Statistics figures have confirmed.

Gross domestic product (GDP) grew 0.8% between April and June, leaving growth 2.6% higher than the same time in 2005, unrevised from first ONS estimates.

A 1% jump in household expenditure, as well as an acceleration in service sector growth, drove the increase.

In contrast, output from production industries weakened to fall 0.2%.

That compared with growth of 0.8% during the previous month.

No mention of the inflation statistic?

[Della]

The implied deflator rose by 1.5 percent on the quarter

Whats that then?

http://en.wikipedia.org/wiki/Gross_domestic_product_deflator

It's a measure in the fall of the value of money in real terms, a larger number is worse. I think the two figures mean that the economy has shrunk in real terms by about 0.64%

[Willy Weasel]

I can see rates rising consistently now over the next 6 months - I expect 5.5% at least. If base rates are 5.5% what would the average SVR be?

[oneb0y]

You'd be looking at SVR's across the board of at least 7.5%.

[Willy Weasel]

You'd be looking at SVR's across the board of at least 7.5%.

So multiplying that by the average mortgage of £180,000 then we get to monthly repayments (IO) of £1125. That's got to start hurting.

[Guest Alright Jack]

Unlikely to alter IRs until November - changes normally come in same month as inflation report

But amazing nonetheless

I don't think the government will be raising interest rates for the christmas spending spree.

The oportunities for raising will be

September & October. Then they will wait until January. But the door mat is filled with christmas bills in January and Feb so maybe they'll wait till March.

Apart from all the speculating a salient point is that (despite what Merv says) the rise DID come as a surprise. I was surprised. He talks about keeping monetary policy boring. Well, on the contrary I think it is very interesting in that after sitting on their hands for two years they suddenly move to 'We raised 'em, and we aint done yet.' Very interesting.

[MarkG]

Ditto: I really can't see them raising in November when so much of the economy relies on Christmas spending. My guess is another hike in September or October, then no more until 2007.

[Golden Shower]

Ahhh, but you've missed the real killer;

Compensation of employees, measured at current prices, rose by 0.8 per cent and is now 6.1 per cent above the level seen in the second quarter of 2005.

That's pretty decent jump for most people IMO. I also suspect the BoE knew much about this before the hike. My guess is IRs on hold until more data comes in.

Are we in a recession yet?

[IamSpartacus]

Ahhh, but you've missed the real killer;

No, this was the real killer:

Interest rate futures, already pricing in a quarter-point hike to 5.0 percent before the end of the year, showed little reaction to the data.

In other words, this wasn't news to the markets. So don't go getting your hopes up that this increases the probability of base rate rises. Of course, RB always neglects to post the parts of the articles that don't suit his VI spin...

A measure of inflation. 1.5 X 12 months = 6%

Utter nonsense! If you take a look at the data here (Table A1) you'll see that indexed against 2003=100, the latest GDP deflator figure is around 108 or just over. That's an annualized inflation rate of 2.6%.

[Come On Down]

So multiplying that by the average mortgage of £180,000 then we get to monthly repayments (IO) of £1125. That's got to start hurting.

Dream on. Average mortgage of £180k ? Where ? did you get that from?

People on SVR will not be on anywhere near that much of a mortgage!

Baby boomers with 10/20k more like.

[oracle]

I don't think the government will be raising interest rates for the christmas spending spree.

The oportunities for raising will be

September & October. Then they will wait until January. But the door mat is filled with christmas bills in January and Feb so maybe they'll wait till March.

Apart from all the speculating a salient point is that (despite what Merv says) the rise DID come as a surprise. I was surprised. He talks about keeping monetary policy boring. Well, on the contrary I think it is very interesting in that after sitting on their hands for two years they suddenly move to 'We raised 'em, and we aint done yet.' Very interesting.

....and with the latast inflationary bout happening now...in bread,orange juice,corn etc.....we are just around the corner from another bout of IR hikes.The last ones lagged energy prices rising by about 18months,these ones are to combat the rise in food prices.

5.5% early next year looks very possible.

take the blinker off guys,there is more to it than houses and crappy electrical goods....even the food you eat will be rising in price,nothing much tesco's can do about a crap wheat harvest is there!!!!!