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Economy is a mixed picture
“MONEY isn’t everything and everything isn’t money — and for all I know, that’s an epigram,” said Groucho Marx, who I happened to be impersonating in the Ryedale Festival last week.
Epigram or not, it’s certainly a good theme for a column as we contemplate the shock of 0.7 per cent negative growth in the second quarter of this year, confirming the longest double-dip recession for more than 50 years.
It now looks likely there will be no growth at all in the UK economy during 2012, contrary to all official forecasts and contrary to almost everyone’s expectation this time last year, when a slow but steady recovery seemed genuinely in prospect.
What’s happened since then is a slow-motion economic catastrophe in Europe, affecting sentiment over here and depressing export orders, plus the impact of public-spending cuts, plus an early summer of pouring rain and Jubilee distractions.
We could argue which of those factors carries the most weight — but we could perhaps argue, more fruitfully, about whether a simple measure of positive or negative growth, expressed in terms of ‘gross domestic product’, which supposedly measures all economic activity, really gives us a useful picture of what’s happening.
It’s odd, for example, that unemployment fell by 65,000 in the three months to May, and even the number of 16 to 24-year-olds out of work was slightly down.
While the public sector has been cutting back, the private sector has created more than 800,000 jobs during the past two years.
More in the south than the north, admittedly. But, still, the overall jobs picture, and data from the manufacturing sector, is by no means as grim as the GDP figures. Meanwhile, inflation has been coming down – to 2.4 per cent in June, its lowest level since 2009.
After a period in which consumer spending was so weak, partly because annual wage rises were falling so far behind inflation, that gap has almost closed again.
That’s why retail figures were looking a bit brighter in May, even if they were set back again by appalling weather in June.
Meanwhile, interest rates are set to stay low for a long while yet and mortgage lending has picked up again – 11 per cent higher this May than a year earlier.
How do all these statistics compare with what we observe in our own localities?
In Helmsley , I see half-a-dozen new businesses opening in the Barker’s Yard development, a re-start on the abandoned house building site behind the Feversham Arms, and new plans in hand for a major housing scheme behind the Black Swan.
On the other hand, I see rain-damaged crops and I hear news bulletins about milk prices, which tell us it’s a tough year for farmers. I also see empty shop units, and a lot of commercial premises for sale but unsold.
So it’s a mixed picture at best — but it’s certainly not as gloomy as the GDP figures suggest. And that is the positive thought I’d like to leave with you for the August holidays.