Recession

rick_chasey

Usually we only hear about being in recession a month or two after it happens.

"The UK economy shrunk 0.2% over the past month, meaning it is in recession".

I like to guess what the growth figures will be by spuriously speculating on the basis of the mood of people at work, and the mood of the people I know about their work.

Anyone think the economy is in recession right now?

I know I do. My clients, clients of friends, they're all stalling about giving work. I've been hearing of redundancies for pretty good people (outside of the City).


So, I recon it's shrunk by nearer 0.5%.

Dave Cornwall

I work in the leisure industry and over the past 9 months I've watched our business decline. People are afraid to spend their money on things they don't really need! It won't be long now before before we are finished.

It's quite depressing, especially being the wrong side of 50 and realising that you are going to be lucky to find another job.

So yes, we are still in a recession. and we haven't seen the worst yet.

rick_chasey

Still?

I thought the UK has been growing, albeit anaemically for the past 12 months?

Cressers

The economy didn't recover from the Crash.

Now Cable is trying to lower expectations and prepare public opinion for the worst in the hope of minimising the inevitable panic that will come...

TheStone

The economy's still a car crash and can't see it getting better until it collapses further.

We had 10 years of 'growth' on the back of a crazy debt bubble. This inevitably crashed, but rather than letting those that caused the problems and took the risks take the major pain, the govt decided to transfer most of the debt onto the general public. Then they added further debt under the guise of 'stimulus', which gave the illusion of growth for a short period, but really just kicked the can down the road. Printing money does much the same thing: transfer the pain and kick the can.

Now, or very soon we have to face up to the debt bubble and whatever way you slice it up, the overall standard of living has to fall.

So whether or not we're in recession now or later, it will come. Growth can stop this, but it needs to be real growth. By that, I mean production, not a further extension of the debt bubble ... I really can't see where that will come from??

Cressers

Now, or very soon we have to face up to the debt bubble and whatever way you slice it up, the overall standard of living has to fall.

...For the people who got us in to this mess, not those who never saw this so-called 'prosperity'

verylonglegs

Mixed signals for me, after a poor 2009 our order book is now rammed and we are at least 25% over our yearly plan and have taken staff on, although only as temps as the firm doesn’t want to commit long term on new employees. I went to a not inexpensive pub for dinner the other week on a Thursday night and couldn’t get in the car park so some folks are still spending.

On the other hand when going on a night out at weekends it used to be at least half hour wait for a taxi home where as now if you call a cab it’s available immediately and the driver will tell you how little the business there is, dire is a word that is used a lot. It’s things like that which they say are a good measure isn’t it, asking hairdressers what the demand for expensive cuts is like for example. Also the number of leaflets through my door from odd-job men, window cleaners etc. certainly getting a lot more of those.

We do seem to be in this cycle of gloom, I said on another thread recently that there are people with money but aren’t spending as the message is constantly bad and everyone should save, which of course means you end up in recession anyway.

rick_chasey

Indeed.

Any spurious predictions for what the growth (or lack of) will be when it's next announced?

Cressers

Probably within the range of -0.2 to -0.4 for the previous three months.

TheStone

verylonglegs wrote:

We do seem to be in this cycle of gloom, I said on another thread recently that there are people with money but aren’t spending as the message is constantly bad and everyone should save, which of course means you end up in recession anyway.

But we're in this mess because we spent more than we were earning.
Savings are always seen as bad in a bizarre 'Keynesian' world, but savings are good as the money is then available for someone else to invest.

The recession is seen as a lack of confidence in spending, but really it's just the inevitable end of a ponzi debt bubble. Spending doesn't solve this. Printing money and throwing it at people to spend, just changes the balance of things, but doesn't improve the overall economy. The only real way to improve things in by producing more things or offering more services that people want to buy ... which then raises the standard of living.

Cressers

Don't forget that the service sector must be based on a thriving industrial and agricultural economy, a lesson that has gone unheeded these last thirty years. What I think is happening is that the economy has become' saturated', as most people have what they need (rather than want) with little further room for growth. What does the future hold? Look at Japan where their economy has been marking time for the last twenty years.

Keith1983

I think there are other factors affecting the front line of spending. The business I work for had a record year in 2010 and with it came nice bonuses. The problem is that the things people need day to day "cost of living" is rising steeply, far above the rate of any increase in earnings. So whilst the business I work for are doing well, things like utility bills, price of fuel and price of food is meaning I have less disposable income. I am therefor spending less on the front line on things like leisure activities and entertainment. I am moving house before the end of the year and the scariest prospect for me as someone who has little savings and is about to take on a mortgage is the prospect of interest rates rising significantly.

TheStone

Cressers wrote:

Don't forget that the service sector must be based on a thriving industrial and agricultural economy, a lesson that has gone unheeded these last thirty years. What I think is happening is that the economy has become' saturated', as most people have what they need (rather than want) with little further room for growth. What does the future hold? Look at Japan where their economy has been marking time for the last twenty years.

Don't really agree with any of those points.

- A country can survive producing services alone as long as they can buy the other stuff from countries that in return want to buy the services.

- We will never run out of things we can do. We're so efficient at the basics that we need very few farmers or miners etc, but there's endless scope for improving our standard of living (health, energy, education, housing, entertainment....)

- Japan suffered as they tried to hard to contain the crash. They printed money, bailed out banks, home owner etc and have ended up with zombie banks and a lost generation.

Frank the tank

We're still in recession and we haven't seen the worst of it yet.

The cuts in public service jobs hasn't kicked in yet and when you look at the potential disaster which is the eurozone and the amount of money our banks/financial institutions have tied up in that; plus the state of the U.S. economy I can't help but think the world could be on the edge of a global depression never mind recession.

Not being a financial wiz kid I don't really know but the signs don't look very good.

Keith1983

Due to the fact that I'm nothing more than an average consumer when it comes to knowledge of the financial workings of the world I can't make my mind up whether or not it is a good thing or bad thing that major countries all over the world are suffering. Some times I think it's bad because it menas there aren't many healthy economies that we could piggy back off to get us through the hard times and other times I think it's a good thing as it means we are all in it together and not just us sinking furhter behind other countries.

rick_chasey

Frank the tank wrote:

We're still in recession and we haven't seen the worst of it yet.

It grew over the last two quarters. (just).

TheStone

Rick Chasey wrote:

Frank the tank wrote:

We're still in recession and we haven't seen the worst of it yet.

It grew over the last two quarters. (just).

These small growth figures (either way) are a bit meaningless when we're running such a large deficit.

If you get 0.1% GDP growth, but the government is borrowing and spending 10% of GDP, then is it really growth.

Even worse is if the government debt is wasted in either continuing to employ unproductive people or incomplete/unwanted projects. The govt deficit is really just stealing GDP from the future. Fine if you leave the future with something that will increase their productivity (a useful bridge for example), but bad if they just have the debt and some empty fire control centres.

pb21

Somehow the flow of capital has to be restored. The deficits of the eurozone countries and the US really need to be sorted and stabled so that confidence is restored before we see any kind of substantial recovery.

I think the economic system of neoliberalism we have been living with over the past 40 years has really messed up. Time will tell just how much...

rick_chasey

TheStone wrote:

Rick Chasey wrote:

Frank the tank wrote:

We're still in recession and we haven't seen the worst of it yet.

It grew over the last two quarters. (just).

These small growth figures (either way) are a bit meaningless when we're running such a large deficit.

If you get 0.1% GDP growth, but the government is borrowing and spending 10% of GDP, then is it really growth.

Even worse is if the government debt is wasted in either continuing to employ unproductive people or incomplete/unwanted projects. The govt deficit is really just stealing GDP from the future. Fine if you leave the future with something that will increase their productivity (a useful bridge for example), but bad if they just have the debt and some empty fire control centres.

Gov't spending's a componant of GDP though, so it's wrong to discount that.

After all, the money that we earn but don't get, (i.e. taxed money) is still spent - just not by us.

mattv

In a bike shop, we find that trade is linked to the economy. As there is less money, we sell MORE bikes as people commute by bike. C2w has been strong again this year, despite the final value and vat rule changes. Also, many people who can afford £2k+ bikes seem to have the money anyway...

rick_chasey

'tis interesting, all the individual anecdotes.

My experience and the experiences of my friends/family etc is all B2B.

pb21

If inflation wasn’t so high, it wouldn’t be as much of an issue but as it is its causing a lot of issues.

Food and energy prices rising as they are relative to the freeze in wages is really causing people to cut back.

TheStone

Rick Chasey wrote:

Gov't spending's a componant of GDP though, so it's wrong to discount that.

After all, the money that we earn but don't get, (i.e. taxed money) is still spent - just not by us.

Sure, for normal taxation/spending, but the deficit is not raised through taxes. It's borrowed against the future. If they were clever enough, the govt could use surplus/deficit to keep growth ever constant. With the current deficit so high, the govt are artificially creating growth ..... but really just adding to the debt ponzi in an attempt to kick the can a little further down the road.

finchy

Rick Chasey wrote:

Indeed.

Any spurious predictions for what the growth (or lack of) will be when it's next announced?

-15.4%

rick_chasey

johnfinch wrote:

Rick Chasey wrote:

Indeed.

Any spurious predictions for what the growth (or lack of) will be when it's next announced?

-15.4%

We're talking UK, not the wild east Europe :P

(How's the newly wed wife?)

neiltb

the kick the can down the road is the unfortunate consequence of allowing politicians to run countries. No politician wants to make a decision that people don't like (it is just a popularity contest after all). They seem even less willing to make decisions now, or am I just more aware of what goes on?

Inflation is a much bigger problem than they make out. In canada they tell us 4% but I reckon it's likely double that at least.

We do all right. I save my company more than they pay me (industrial engineering), so they like me around and the wife is doing well in her pursuits. My sister in law must be finding it tough on her salary though.

Pross

Doesn't feel like we ever left the recession in my line of work (Consulting Engineering). House builders are doing a bit more but just developing houses they had already got consent for, a large retailer we do most of our current work for knocked our fees down by 40% and are looking for more, we had to take a 10% cut in salary and had employers contributions to pension removed in 2009 along with over 10% of the employees being made redundant then lost other benefits such as company car drivers losing their private fuel benefit and free health insurance being removed. All in all I am about £400 a month worse off in actual terms than I was 3 years ago and then there's inflation on top. We have just lost about 12% of our remaining workforce and although I am personally very busy at present (albeit on work with little to no profit margin) there isn't much sign of improvement further down the development chain.

It would be great for me if the government chucked a load of money into road building, social housing etc. which would bring work into my sector but I still think that the current policy of cuts has to be implemented first.

By the way, isn't the official definition of a recession to be two consecutive quarters of negative growth? That is great for a government as one small patch of tiny growth starts the cycle again.

Stiff_Orange

Pross wrote:

It would be great for me if the government chucked a load of money into road building, social housing etc. which would bring work into my sector but I still think that the current policy of cuts has to be implemented first.

Unfortunetly they only truthful statement that came out of Gordon Brown's government was the note which Liam Byrne left at the treasury "There's no money left".

pb21

Pross wrote:

I still think that the current policy of cuts has to be implemented first.

The IMF doesnt, which has long been Gideon's crutch for these cuts...

http://www.guardian.co.uk/business/2011 ... ession-imf

verylonglegs

They've obviously seen this thread today and have decided to do something...

http://www.bbc.co.uk/news/uk-14985709

finchy

Rick Chasey wrote:

(How's the newly wed wife?)

Doing a job for which she's overqualified, working for a manager who is incompetent. :evil: