This is an interesting article because of what it doesn’t tell us rather than what it does tell us. It would appear that the GDP figures for the first quarter of 2009 have been revised downwards from –1.9% to –2.4%. We can accept that the official figures may be subject to periodic revision, and that the revisions can be quite substantial at times (the GDP figure was revised by about a quarter). However, it doesn’t really convey a great deal of information about where we are now, and, more importantly, where we are headed in the future.
In a previous post (see post) we commented upon February experiencing the peak in the growth of unemployment. Since then, unemployment has been growing at a slower rate each month, which suggests that the real economy may now have turned the corner. All the GDP figures have done is to confirm that story – that things were pretty dire in the first quarter of 2009.
Are they dire now? The evidence – mainly anecdotal at the moment – suggests that things are getting easier. Industrial production is up in the East Asian economies, the commodity markets have tightened, and banks are lending again – both to themselves and real world companies. Whilst we have not recovered the ground lost, things don’t seem to be getting worse either.
For the future, the question is whether or not we are likely to see a ‘double-dip’ recession. If things do worsen over the autumn (possibly due to swine flu) then the recession could be longer and deeper than originally feared. However, that is a pretty dystopian scenario. All of the evidence suggests that unemployment will not reach 3 million by the end of 2009, which is what the doomsters were forecasting back in December.
For now, we will just have to sit and wait to see what does actually happen. So far, it has been nowhere as bad as had been suggested by some commentators.