Comments on: The UK: Demand, Supply, the Deficit & Rebalancing

By: Gareth

Gareth — Thu, 11 Aug 2011 21:04:16 +0000

I referenced the retail figures because they are the only nominal spending figures that we have since Q1 as far as I can tell, I can’t find Q2 GDP-expenditure data, am I missing that?.

What domestic consumption measure has been falling? Household final consumption expenditure (ONS ABJQ) grew 2.7% from 10Q3 to 11Q1. Annualized that is 5.4%, which is bang on the pre-crisis trend growth rate. Yes, prices also went up and the deflator is really high, and the VAT rise looks like an AS shock this year as expected, but those are all separable facts.

By: duncanseconomicblog

duncanseconomicblog — Thu, 11 Aug 2011 14:58:01 +0000

Gareth,

1/ I still worried by the growth rates of M4 and M4L (and especially M4-OFCs) regardless of velocity changes. As an aside my first proper job was doing money and credit at the BOE, I’m quite comfortable with the numbers.

2/ Consumption (which is different to retail sales) fell in Q4 ’10 and Q1 this year. We don’t have Q2 figs yet.

By: Gareth

Gareth — Thu, 11 Aug 2011 14:41:07 +0000

1) Broad money is falling, but broad money velocity has been increasing since the middle of 2009.

2) If you are going to separate demand and supply, why do you come out with tired cliches like “consumers are not spending” when this is not what the stats say?

Retail spending is up 4% in the 12 months to June 2011; this is historically a fair growth rate in retail demand. We measure demand by nominal spending, of course.

Prices have gone up by 3.7% over that same period. So, yes, there has been a supply shock: the VAT rise and commodity prices going up 50% would do that.

By: Why the UK has to get used to lower economic growth | Liberal Conspiracy

Why the UK has to get used to lower economic growth | Liberal Conspiracy — Mon, 08 Aug 2011 07:32:51 +0000

[...] growth by Chris Dillow August 8, 2011 at 8:32 am In the economic debate between left and right, there seems to be a shared presumption which I find [...]

By: Carol Wilcox

Carol Wilcox — Tue, 02 Aug 2011 14:52:20 +0000

The banks need to be weaned off the land milch. Most bank loans are backed up by landed property. Land is in fixed supply and will always retain its value in the longterm. Thus banks do not have to worry about risk. Collect all land rent for public benefit and capital land values will tend to zero (whilst rental values will increase). This will force banks to have to do some proper work. Home loans will revert to the mutual sector where they belong. Banks can concentrate on lending to businesses which means they will have to actually get to know something about their clients – boring and less rewarding for them but of great benefit to our economy.

By: gastro george

gastro george — Tue, 02 Aug 2011 13:56:54 +0000

Yes, it’s both, surely. And bank lending is also being restricted by the bad terms that they are offering, higher interest rates and more security required.

By: duncanseconomicblog

duncanseconomicblog — Tue, 02 Aug 2011 12:27:08 +0000

In aggregate corps are sitting on a huge cash pike and unwilling to invest.

But there are also businesses reporting a problem raising funds.

By: gastro george

gastro george — Tue, 02 Aug 2011 12:14:40 +0000

Does Osborne care, as long as the media are full of the words default, debt and deficit, and he can offer some tax cuts just before the next election?

By: Paolo

Paolo — Tue, 02 Aug 2011 12:14:16 +0000

Corporations are constrained by banks not lending
Really? I heard this morning on the Today programme Peston reporting that Diamond (Barclays’ CEO) complained that even SMEs are ammassing record level of cash…