Is recession looming?

[dealtn]

So without reference to those statistics and data how are you assessing that is the state of the economy through your observations?

Er...by my observations mentioned and other indicators - in the much same way that I would observe I am reasonable healthy as I a can still play badminton and run around a bit without recourse to pulling data from a fitbit.

So again, how is that observation technique the same, when in one you need to observe 50 million people across a huge geography, and in the second you just need to observe one. Yourself.

Presumably we can agree they aren't the same type of observation. So I am interested, genuinely, how you observe the state of the UK economy sufficiently to know about its relative recessionary state, without recourse to statistics or data produced by others.

[Smoggy]

There are surveys in America that show that although most people felt their own finances improved over a given period, they thought the economy as a whole had worsened. This is why good statistics are important as our perceptions can be influenced by many factors including media or politicians with a narrative to sell.

It also strikes me that a lot of the visible economy such as shops and pubs are perhaps doing less well than other parts of the economy. People sitting at home working good jobs from their bedrooms then consuming films, computer games and cheese delivered by Waitrose is still part of the economy, even if you can't see it like people queuing at a cinema.

[Oggy]

So again, how is that observation technique the same, when in one you need to observe 50 million people across a huge geography, and in the second you just need to observe one. Yourself.

Presumably we can agree they aren't the same type of observation. So I am interested, genuinely, how you observe the state of the UK economy sufficiently to know about its relative recessionary state, without recourse to statistics or data produced by others

Obviously that technique only applies to me - I was simply providing an example. I observe the economy from talking with many folk from varying backgrounds and how they experience the UK, my own experiences in and out of work, reading newspapers and various forums such as this one, and by how we are viewed from afar by speaking with a few folk who reside outside the UK. I appreciate this is a qualitative approach and can be subjective, but my view is that the quantitative approach of data and charts is abused and certainly biased in many cases to present an agenda. The raw data is also manipulated beforehand. Thus in many cases we do not get a true picture, rather we get a selective view. In an ideal world, I would vastly prefer the quantitative approach, but quite frankly I just don't trust folk enough to believe much of it.

[funduffer]

[
Obviously that technique only applies to me - I was simply providing an example. I observe the economy from talking with many folk from varying backgrounds and how they experience the UK, my own experiences in and out of work, reading newspapers and various forums such as this one, and by how we are viewed from afar by speaking with a few folk who reside outside the UK. I appreciate this is a qualitative approach and can be subjective, but my view is that the quantitative approach of data and charts is abused and certainly biased in many cases to present an agenda. The raw data is also manipulated beforehand. Thus in many cases we do not get a true picture, rather we get a selective view. In an ideal world, I would vastly prefer the quantitative approach, but quite frankly I just don't trust folk enough to believe much of it.

I think they call this 'anecdotal evidence'.

I am surprised you think an organisation like the ONS have some sort of biased agenda. They have been known to point out when government officials mis-represent the data.

FD

[vand]

https://amp.theguardian.com/business/20 ... el-squeeze

We have a 0.3% contraction in October vs a 0.0% expectation.

Remember there's a million households coming off their cheap fixes between now and next summer.

[dealtn]

https://amp.theguardian.com/business/2023/dec/13/uk-economy-shrinks-unexpectedly-as-households-feel-squeeze

We have a 0.3% contraction in October vs a 0.0% expectation.

Remember there's a million households coming off their cheap fixes between now and next summer.

True.

Also remember there many multiples of this number of households whose real wages are rising and whose average earnings are rising yet the value of those mortgages are falling too. Both impact on remortgage affordability, yet are going in opposite directions. It is the net effect of both that influence disposable income after housing, not just one.

[vand]

https://amp.theguardian.com/business/2023/dec/13/uk-economy-shrinks-unexpectedly-as-households-feel-squeeze

We have a 0.3% contraction in October vs a 0.0% expectation.

Remember there's a million households coming off their cheap fixes between now and next summer.

True.

Also remember there many multiples of this number of households whose real wages are rising and whose average earnings are rising yet the value of those mortgages are falling too. Both impact on remortgage affordability, yet are going in opposite directions. It is the net effect of both that influence disposable income after housing, not just one.

From anecdotes I hear the job market will deteriorate considerably in 2024 imo. It's happening already - firms gave bumper (nominal) increases in 2023 due to inflation and a tight labour market, but that has considerably softened now and companies are prepared to lowball and stand their ground.

It all stands to reason - firms can't give mega raises if there's less money going around in general and they're doing less business than last year.

Again, this won't show up in the figures for a few months, but it is what I am hearing for this year's reviews.

[Oggy]

Perception, anecdotes and qualitative evidence are important. It could be argued that is what markets are based on to a large degree. If a person "feels" poor or "senses" they are increasingly impoverished, then regardless of any hard data which may prove they are not, many will still maintain that view. Belief is a powerful thing and often overcomes reality.

[dealtn]

Perception, anecdotes and qualitative evidence are important. It could be argued that is what markets are based on to a large degree. If a person "feels" poor or "senses" they are increasingly impoverished, then regardless of any hard data which may prove they are not, many will still maintain that view. Belief is a powerful thing and often overcomes reality.

Which is why there are long running series of "survey" data that the markets look out for, and react to. They have consistency of sampling and track records. The markets like to have that mix to add to hard data which is often lagged.

Certain data is viewed as predictive and others as confirmatory.

From 25 years in the markets professionally most "news" is "noise" and perception and anecdotes are firmly in that bracket. Not to say that markets don't react to it, most agents are emotional humans after all, but correction is often swift with data generally of greater lasting importance than sentiment.

[Oggy]

Which is why there are long running series of "survey" data that the markets look out for, and react to. They have consistency of sampling and track records. The markets like to have that mix to add to hard data which is often lagged.

Certain data is viewed as predictive and others as confirmatory.

From 25 years in the markets professionally most "news" is "noise" and perception and anecdotes are firmly in that bracket. Not to say that markets don't react to it, most agents are emotional humans after all, but correction is often swift with data generally of greater lasting importance than sentiment.

I'd agree - generally, but there is the sort of date you mention which can generally be relied upon, and there is the other data I mentioned previously pumped out by governments, media, people with agendas to pursue, etc. which personally I take with very large pinch of salt. In the end, I guess it is down to who you believe and trust, but personally I would not trust governments and media one iota.

[dealtn]

Which is why there are long running series of "survey" data that the markets look out for, and react to. They have consistency of sampling and track records. The markets like to have that mix to add to hard data which is often lagged.

Certain data is viewed as predictive and others as confirmatory.

From 25 years in the markets professionally most "news" is "noise" and perception and anecdotes are firmly in that bracket. Not to say that markets don't react to it, most agents are emotional humans after all, but correction is often swift with data generally of greater lasting importance than sentiment.

I'd agree - generally, but there is the sort of date you mention which can generally be relied upon, and there is the other data I mentioned previously pumped out by governments, media, people with agendas to pursue, etc. which personally I take with very large pinch of salt. In the end, I guess it is down to who you believe and trust, but personally I would not trust governments and media one iota.

Which is why the Government uses independent bodies such as the ONS

[CryptoPlankton]

I'd agree - generally, but there is the sort of date you mention which can generally be relied upon, and there is the other data I mentioned previously pumped out by governments, media, people with agendas to pursue, etc. which personally I take with very large pinch of salt. In the end, I guess it is down to who you believe and trust, but personally I would not trust governments and media one iota.

Which is why the Government uses independent bodies such as the ONS

The ONS may be independent, but it often relies on data provided by government departments. In my short time in the old Department of Employment, I witnessed first-hand how unemployment figures were "massaged" in the 1980s.

[vand]

So
Q2 has been revised down from +0.2% to 0.0%
Q3 has been revised down from 0.0% to -0.1%
https://www.msn.com/en-gb/money/other/u ... 06d0&ei=37

and we know that the provisional Oct number was -0.3% -- so unless there has been a miraculous recovery over Nov/Dec to claw that back - which seems rather unlikely to me - we are already in recession. Ne c'est pas?

I started the thread in March 2022 and I am surprised that how resilient the UK and other economies have been considering all the craziness that was happening at that time, but as always, it is the central bank response to those events rather than the events themselves that have tipped us off the edge.

[Nimrod103]

https://www.telegraph.co.uk/business/20 ... ew-bailey/

Matthew Lynn lets loose with both barrels:

The Shadow MPC wasn’t alone: many City economists have been fretting that, with the economy slowing sharply, the Bank may have kept rates too high for too long, and that risks pushing the UK into a completely unnecessary downturn.

A fundamental problem is this. Across British officialdom, it seems that so long as you are part of the Remain, centrist establishment, and dismiss tax cuts, competitiveness and free trade on grounds they either won’t boost growth or cannot be pursued because our population is ageing or global supply chains are fragile, you get a free pass.

You can print too much money, trigger a round of inflation, hold interest rates at near zero, realise the mistake too late, push rates too high and hold them there for too long, and can do so shielded from the consequences.No one in government will suggest that perhaps you should have looked at the data more closely, or talked to a few more small businesses and regional estate agents to get a feel for what is happening in the real economy, or consulted external economists, and then come to a more informed decision.

If decisions have no consequences, then there is no incentive to ever get them right. The British economy cannot endure a Bank which might be “independent” but isn’t accountable and lacks intellectual diversity.

The MPC needs more balance. Members who get calls badly wrong should face scrutiny – or even the sack.

Also worth remembering that the current high interest rates will not be having their full effect for another 18 months to 2 years (from the same article "And this increase in interest rates, which the Bank itself makes clear will have maximum impact between 18 months and two years from now").
I would suggest a recession is already baked in, and it could be a deep one.

[Oggy]

Matthew Lynn writes much sense and consistently chops down the political wood so we can see the trees. He is derided by the establishment as he can see right though the BoE's political posturing and politicians' total inability to create growth and incentivise work.

[dealtn]

Matthew Lynn writes much sense and consistently chops down the political wood so we can see the trees. He is derided by the establishment as he can see right though the BoE's political posturing and politicians' total inability to create growth and incentivise work.

BoE political posturing?

Examples or evidence? Having met many that work in that organisation, and known a number that have served on the MPC, they would strongly disagree.

[CliffEdge]

Matthew Lynn writes much sense and consistently chops down the political wood so we can see the trees. He is derided by the establishment as he can see right though the BoE's political posturing and politicians' total inability to create growth and incentivise work.

Matthew Lynn writes absolute unsubstantiated garbage. He's a posturing nincompoop straight out of the Boris Johnson school of integrity, honesty, decency, and percipience. A traitor.

[NotSure]

Matthew Lynn writes much sense and consistently chops down the political wood so we can see the trees. He is derided by the establishment as he can see right though the BoE's political posturing and politicians' total inability to create growth and incentivise work.

Matthew Lynn writes absolute unsubstantiated garbage. He's a posturing nincompoop straight out of the Boris Johnson school of integrity, honesty, decency, and percipience. A traitor.

Well, I'm not sure exactly what ML's credentials are. Educated at Balliol, so I guess he probably knows a lot about "the establishment", but otherwise best known as a writer of fiction (literally - literature).

His biggest claim to fame seems to be his prediction the demise of Apple via the iPhone.

Matthew Lynn of Bloomberg (January 2007):

“Apple iPhone Will Fail in a Late, Defensive Move”

“Apple will sell a few to its fans, but the iPhone won’t make a long-term mark on the industry.”

“To its many fans, Apple is more of a religious cult than a company. An iToaster that downloads music while toasting bread would probably get the same kind of worldwide attention.

Don’t let that fool you into thinking that it matters. The big competitors in the mobile-phone industry such as Nokia Oyj and Motorola Inc. won’t be whispering nervously into their clamshells over a new threat to their business.

The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks.”

So he's no Warren Buffet, but good at clickbait for the DT comment writing crowd. "Woke establishment transgender globalist remainer left-winger techno elitist will doom all us normal people" sort of stuff, where "normal" means the righthand fringe of the Tories, a party whose centre are currently getting caned in the polls. From what I've read, a suitably trained chat bot could easily replace him and no-one would notice.

None of this is intended to criticise his views and opinions to which he has a sacrosanct right, just the grounds on which we are supposed to take them seriously, let alone be influenced by them.

Happy Christmas, ladies and gentlemen!

[Oggy]

There is nothing fundamentally wrong with what he wrote. The BoE/MPC is clearly unfit for purpose given their abysmal track record and the madness that was QE. There is no accountability, no sense of direction and the markets are not exactly enamoured by them. The UK needs to incentivise and promote growth. It is the only sustainable way to improve the economy - for everyone - but I cannot see anyone at the BoE or within government who has the faintest idea of how to achieve it.

[Mike4]

What surprises me is the MPC voted 6 for keeping rates the same but 3 voted for yet another rise!