The Good News thread, local jobs, economy etc

[Webbo]

What's that got to do with the price of eggs?  The inflation figures mean nothing to anyone with half a brain.

Lets get this straight, the inflation figures are a lie or the inflation figures don't matter?

[MooseBreath]

Does anyone really believe the Government's inflation figures?

If by the government you mean ONS, the independent body who put the figures together then yes, I do. Their methodology is available for anyone to see how it is calculated, and personally I think it's very good. What particular parts of it do you disagree with?

[Rincewind]

Does anyone really believe the Government's inflation figures?

Yes the Government.

[Guest MattP]

Does anyone really believe the Government's inflation figures?

Yet you were happy to use them agaisnt the government when it looked bad

Why don't you lot just admit yet again you got it completely wrong on everything you have said and written about economics.

Osbourne has played a blinder, how thick you would have to be to want Ed Balls in charge of our economy I can't comprehend.

[Alf Bentley]

ONS is basically a civil service department answering to parliament with lots of specialist statisticians who guard their independence jealously (I know because I spent a couple of years in the 80s working for OPCS, one of the departments part-merged to form ONS).

 

All economic stats are approximations to varying degrees and prone to inaccuracy, but those produced by ONS will be among the best available.

 

Of course, the Government (or the opposition) may select and distort particular stats, but not the headline inflation figure.

 

However, all economic stats are best viewed over the medium-term (at least a few quarters, sometimes a few decades, depending on the nature of the stats). Inflation figures may be distorted in the short-term (e.g. if the price of an important item falls temporarily), but I've no idea whether that is the case here as I've too much work to do to look into it properly.

 

A medium-term fall in inflation might ease the downward trend in real incomes (still falling), without which Osborne is generating a short-term (1-2 years?) credit bubble, not a recovery....but it might not, depending on employers' margins and attitudes.

 

Also, if lower inflation is sustained, I wonder if that might mean that interest rates will be raised earlier than currently expected, maybe bringing a business downturn and popping the housing bubble before the 2015 General Election? If so, Osborne certainly won't have played a blinder! Going to be an interesting couple of years, either way...

[Rincewind]

There are three kinds of lies: lies, damned lies, and statistics

[MooseBreath]

ONS is basically a civil service department answering to parliament with lots of specialist statisticians who guard their independence jealously (I know because I spent a couple of years in the 80s working for OPCS, one of the departments part-merged to form ONS).

All economic stats are approximations to varying degrees and prone to inaccuracy, but those produced by ONS will be among the best available.

Of course, the Government (or the opposition) may select and distort particular stats, but not the headline inflation figure.

However, all economic stats are best viewed over the medium-term (at least a few quarters, sometimes a few decades, depending on the nature of the stats). Inflation figures may be distorted in the short-term (e.g. if the price of an important item falls temporarily), but I've no idea whether that is the case here as I've too much work to do to look into it properly.

A medium-term fall in inflation might ease the downward trend in real incomes (still falling), without which Osborne is generating a short-term (1-2 years?) credit bubble, not a recovery....but it might not, depending on employers' margins and attitudes.

Also, if lower inflation is sustained, I wonder if that might mean that interest rates will be raised earlier than currently expected, maybe bringing a business downturn and popping the housing bubble before the 2015 General Election? If so, Osborne certainly won't have played a blinder! Going to be an interesting couple of years, either way...

Why do you think it's a credit bubble and not a recovery?

[Alf Bentley]

There's a 10-year inflation graph here, plus explanations for the fall in the inflation rate that has just been announced (mainly due to reductions in prices for petrol and used cars plus increased tuition fees having fed through the system, it seems):

 

http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/october-2013/consumer-price-inflation-summary--october-2013.html

 

Georgie Boy will be hoping that wholesale oil prices, housing costs and utility prices don't rise again, then...

[Alf Bentley]

Why do you think it's a credit bubble and not a recovery?

 

Must work now, so can't reply properly but...

 

1) The continuing decline in real incomes (nominal incomes adjusted for inflation), meaning that domestic consumers - the main force behind the current "recovery" - are spending beyond their means...possible short-term, not medium-term...though if wages start rising a bit faster or inflation remains low, that might prevent or at least delay the bubble.

2) A proper recovery requires sustained growth, which requires someone to buy more of our goods and services (or to pay more for them); with public spending cuts, lack of finance for private business, increasingly indebted consumers and mediocre export figures, I don't see where that extra demand is going to come from....people rushing to take out mortgages and to buy home furnishings and consumer goods on credit cards won't sustain things unless some other factor improves significantly.

3) Interest rates will be raised at some point in the next couple of years, which will make life difficult for a lot of people/companies living on the edge.

 

Sorry, Moose, but I'd better stay out of this forum for a while now as I'm snowed under with work (must be the recovery!)

Edited 15 January 2014 by Alf Bentley

[MooseBreath]

Fair points but I think you're making some major assumptions, chiefly that people are spending above their means. Maybe they're just saving less? Maybe they are spending savings? This applies to both individuals and businesses of course. A lot of businesses will have held back on investment due to uncertainty during the downturn. They will have piled up cash reserves, and now they will be feeling confident enough to spend. To say it's all credit fueled is a bit of an unrealistic assumption IMO.

[Alf Bentley]

Fair points but I think you're making some major assumptions, chiefly that people are spending above their means. Maybe they're just saving less? Maybe they are spending savings? This applies to both individuals and businesses of course. A lot of businesses will have held back on investment due to uncertainty during the downturn. They will have piled up cash reserves, and now they will be feeling confident enough to spend. To say it's all credit fueled is a bit of an unrealistic assumption IMO.

 

I wouldn't say that it was "all" credit fueled, but my impression is that a lot of it is. I might be wrong about that. I'm just a bloke who has a bit of economic literacy, certainly no expert - and even expert economists are wrong half the time!

 

You have a point re. businesses holding back investment and feeling more confident - that might be part of the picture - though, given the highly competitive nature of advanced capitalism, I doubt that many have "piled up cash reserves". Also, that investment would only lead to medium-term growth if there was sustained demand for the goods and services produced through that business investment....who's going to be buying more goods and services? Not Govt....Domestic consumers? Exports?

 

If people are spending savings, surely that is also unsustainable in the long-term? Though it might take longer than personal debt to cause major problems. Is the UK not also one of the countries with the lowest savings rates in the western world...to the extent that we are not saving enough for our pensions? Is it not also true that levels of personal debt (mortgages, credit cards) have ballooned in recent years?

 

Interesting debate, interesting times....but I must work!

[l444ry]

Yet you were happy to use them agaisnt the government when it looked bad

Why don't you lot just admit yet again you got it completely wrong on everything you have said and written about economics.

Osbourne has played a blinder, how thick you would have to be to want Ed Balls in charge of our economy I can't comprehend.

 

Did I Matt? Sorry but don't remember using inflation against the government. And if you'd kindly show me when and where I got "everything completely in error on economics", I'll gladly admit the error of my ways. Meanwhile, smiley  emoticons are hardly a replacement for sensible debate. Thought you were better than that!  

Edited 15 January 2014 by l444ry

[Rincewind]

http://www.bbc.co.uk/news/uk-25733830

[Webbo]

http://www.bbc.co.uk/news/uk-25733830

Can you not spam every thread with the same article Ken? Pick a thread and stick to it please.

[Rincewind]

It was only the benefit and economy thread very appropriate for a balanced view I would have thought.

[Guest MattP]

Did I Matt? Sorry but don't remember using inflation against the government. And if you'd kindly show me when and where I got "everything completely in error on economics", I'll gladly admit the error of my ways. Meanwhile, smiley  emoticons are hardly a replacement for sensible debate. Thought you were better than that!  

 

Sorry I thought it was you and Daggers a couple of years back that kept on posting we were on the verge of a triple dip recession (we didnt even hit a double we know now) and that Osbournes austerity plans were never going to lead to growth.

 

My memory isn't good so if I wasn't you no problem.

[Alf Bentley]

Now then! This is interesting in the context of our debate on "recovery or credit bubble" and "falling real wages v. businesses about to invest".....

 

"Red George" Osborne wants the minimum wage to rise by more than inflation, up to £7 per hour!!

http://www.bbc.co.uk/news/uk-politics-25766558

 

Yet the CBI and the British Chamber of Commerce claim this would be unsustainable and would damage the recovery:

http://www.itv.com/news/update/2014-01-16/cbi-unaffordable-minimum-wage-rise-would-cost-jobs/

 

Come on, you Thatcherites, who's right? "Red George" or the voices of British business?

 

A hike in the minimum wage might well push up wages higher up the ladder, theoretically generating the rise in real incomes that we need for a bubble to become a recovery. But will businesses be profitable enough to afford that, or will it reduce investment and growth, and cause unemployment? Also, is the fall in inflation going to be longlasting enough to resist an upturn in pay, and might this bring interest rises into play earlier than expected - maybe well before the general election?

 

Glad to see "Red George" echoing my call for a rise in real wages, though, even if his motives might be partly electoral! 

[Guest MattP]

Personally think a rise in the minimum wage to the level being talked about would be tremendous if we didn't have an open border policy with the EU.

With millions upon millions allowed to come here from places where wages are so poor I think it would lead to massive levels of unemployment.

You would even be getting German and Dutch unskilled coming over with that as a minimum.

It's a beauty of a vote of winner from George though I'll give him that, you can imagine Balls and Beaker worrying to death about It tonight.

[Rincewind]

Cynic.

Edited 17 January 2014 by Rincewind

[Guest MattP]

Cynic.

I wouldn't worry it's a wage, it won't be affecting you.

[Harry - LCFC]

[The God Emperor]

minimum wage going up again. good luck to all those unskilled and inexperienced school leavers in finding that first job, your going to need it now.

just when i thought i was starting like the tories a bit 

[Webbo]

It's obviously an attempt to get votes. It's not necessarily going up to seven pounds anyway as its decided by the low pay commission.

[Alf Bentley]

It's obviously an attempt to get votes. It's not necessarily going up to seven pounds anyway as its decided by the low pay commission.

 

That'll be part of it, Webbo (or maybe just to influence the media agenda at this stage), and it may well not go up to £7, but I bet it'll go up significantly. The Low Pay Commission may be independent, but takes submissions from interested parties - and the Govt has argued for this increase. That'll doubtless be supported by the TUC and anti-poverty groups, and opposed by the CBI etc. So, probably a significant increase, but below £7, I'd guess.

 

Could be a good move both economically and politically, boosting real incomes at every level (not just minimum wage), but with major risks. Osborne really could be "playing a blinder" (as Matt thinks) if he pulls this one off. Good news on the whole, but politically more worrying for the left than the right, I think....

[Alf Bentley]

Forgot to say - excellent "Red George" photoshop, Harry.

 

Someone should use that as their photo. I couldn't face being associated with the bustard and suspect that you couldn't either.

Matt?!