scrubbedexpat099

So the media seems full of UK growth at 1.9% being a major plus.

Celebrations all around.

I do not get it, it may well be that senility is catching up.

But with inflation at 2% and population increasing at a seemingly unknown rate would not GDP have to increase by a lot more than that just to break even?

holly_1948

Lies, damned lies and statistics.

Back in the day four and a half years into a recovery would have meant that lots of working-class people who were once out of work now have half-way decent jobs.

Nowadays working-class is politically incorrect so we don't use that term anymore. And recovery means the rate at which the rich get richer exceeds the rate at which the poor get poorer.

scrubbedexpat099

Is GDP adjusted for inflation? That would be the only thing that makes sense.

Michael

Whenever GDP growth rate is quoted, it is "real" GDP growth (after inflation).

UK GDP Growth Rate Quarter over Quarter

UK GDP Growth Rate On An Annualized Basis

UK GDP in Constant Prices

The UK economy is becoming one of the stars of Europe. The Euro area is still a pig sty overall.

Euro Area GDP Growth Rate Quarter Over Quarter

Euro Area GDP Growth Rate On an Annualized Basis

scrubbedexpat099

Wonder what the margin of error, inflation and real GDP must be a bit of a guess, and then how GDP is allocated is another issue.

When you are dealing with such tiny numbers I cold envisage it could make a big difference.

The numbers seem to be sold is that everybody is a bit better off, which seems unlikely.

Michael

GDP numbers are recalculated 3 times during the quarter so until 3 months from now, you won't know the real numbers. Obviously there will be errors but GDP figures give a pretty accurate trend indication. GDP growth is calculated on a basket of products and services (everything from health care to financial services to food and gas) which is about the same from country to country for developed countries. For emerging economies and third world countries, the basket is vastly different than that for developed countries since how could someone possibly live on $2 per day in a developed country but can survive in a third world country. Prior to changing the basket, GDP figures were always very under calculated for emerging markets and third world countries. If China used the same basket as developed countries, China would only be about the 7th largest economy in the world instead of the 2nd largest.

Michael

GDP figures do not reflect the distribution of wealth but only the growth of products and services within a country.

scrubbedexpat099

Not exactly how it is conveyed.

Uk Population increased by about 1% or so last year.

Michael

GDP figures do not account for population changes. GDP per capita is needed for that figure.

UK GDP Per Capita

US Conservatives usually point to France as having a poor economy due poor GDP per capita growth during the past 35 years. If you set both the UK and France to start at 1980, you'll see a significant difference where the GDP per capita for the UK was below France in 1980 but is currently above France.

France GDP Per Capita

One of the main reasons that France's GPD per capita has fallen behind the UK is it's work force participation rate has been declining over the last 35 years (currently about 55% compared to 63% for the UK).

Figures are quoted in constant PPP$ to give an accurate comparison.

If you compare Japan since it's peak in 1992 to the UK, you can also see why the Japanese economy has stalled for the past 20 years. Prior to 1992, the Japanese economy was growing at such a fast rate that it was expected to overtake most of the world's developed economies on a per capita basis by 2000 but instead GPD growth has been dismal since then. The GDP per capita for Japan is over inflated since it has a declining population.

Japan GDP Per Capita

GDP growth is just one indicator of the health of an economy.

steveq

Hey, I work, therefore I must be working class.

scrubbedexpat099

http://www.theguardian.com/news/data...rths-migration

Interesting charts showing the projected increase in population and change in age ranges.

Giantaxe

It may be a "star", but total GDP is still lower than pre-recession.

Michael

It's trend is in the right direction and the UK is one of the few European economies that analysts have been positive about recently. I believe that Germany is the only major European economy that has exceeded pre-recession levels.

Michael

I suspect a lot of the migration to the UK will be from many countries in the following link.

World's Fastest Shrinking Countries

Although Germany is in the list, I suspect they will also have a fairly large positive migration flow but will continue to shrink due to the very low fertility rate.

scrubbedexpat099

I did not really make my point.

We have a very small recent growth in GDP, a medium term decline and long term who knows.

I would put serious money on there being an economic disparity between those coming in and those leaving.

Yet GDP per person in the workforce will have to increase significantly just to stand still.

That does not take into account the needs of an aging population will be far more expensive than they are now.

That chart has nearly 100,000 people over 100.