UK economic growth
Discussion
I saw today that the UK economy grew at 2.5% last year, it was said to be the fastest growth since 2007.
My query relates to how this figure is arrived at.
Suppose you have a year of decline (recession) as we have had and then record growth, is this measured against the year of decline in which case we may not be back to where we were and that is without including inflation.
With our total population 10% up on previous and inflation at perhaps 3 or 4% isn't 2.5% of total growth actually a decline in real, like for like terms or am I missing something?
My query relates to how this figure is arrived at.
Suppose you have a year of decline (recession) as we have had and then record growth, is this measured against the year of decline in which case we may not be back to where we were and that is without including inflation.
With our total population 10% up on previous and inflation at perhaps 3 or 4% isn't 2.5% of total growth actually a decline in real, like for like terms or am I missing something?
Thankyou4calling said:
I saw today that the UK economy grew at 2.5% last year, it was said to be the fastest growth since 2007.
My query relates to how this figure is arrived at.
Suppose you have a year of decline (recession) as we have had and then record growth, is this measured against the year of decline in which case we may not be back to where we were and that is without including inflation.
With our total population 10% up on previous and inflation at perhaps 3 or 4% isn't 2.5% of total growth actually a decline in real, like for like terms or am I missing something?
http://www.ons.gov.uk/ons/rel/elmr/explaining-economic-statistics/understanding-gdp-and-how-it-is-measured/sty-understanding-gdp.htmlMy query relates to how this figure is arrived at.
Suppose you have a year of decline (recession) as we have had and then record growth, is this measured against the year of decline in which case we may not be back to where we were and that is without including inflation.
With our total population 10% up on previous and inflation at perhaps 3 or 4% isn't 2.5% of total growth actually a decline in real, like for like terms or am I missing something?
Its yet another economic miracle performed by the current sitting Government. Unemployment down, more young persons in apprenticeships, wages up, growth up, inflation down, interest rates held again at all time low, benefits bill down, more NHS staff.
Most of it is b*llocks of course, who would have thought an general election is around the corner! Working people in the U.K. have never had it so bad for the past 50 years. Workers treated like sh*t whilst those at the top ingratiate themselves like pigs to a trough.
Still the current Coalition is a better bet than some of the other hopefuls I guess
Most of it is b*llocks of course, who would have thought an general election is around the corner! Working people in the U.K. have never had it so bad for the past 50 years. Workers treated like sh*t whilst those at the top ingratiate themselves like pigs to a trough.
Still the current Coalition is a better bet than some of the other hopefuls I guess
My old economics teacher used to give this example of GDP.
If everyone in the UK went out today and crashed their cars.
GDP would go up, as repairs were made, insurance companies hired more staff, Car Hire, taxis were used more often.
But nothing of any REAL economic value was created, and it was a one off event.
GDP is a broad measure of activity, as sort of BMI of the economics world
If everyone in the UK went out today and crashed their cars.
GDP would go up, as repairs were made, insurance companies hired more staff, Car Hire, taxis were used more often.
But nothing of any REAL economic value was created, and it was a one off event.
GDP is a broad measure of activity, as sort of BMI of the economics world
Gargamel said:
My old economics teacher used to give this example of GDP.
If everyone in the UK went out today and crashed their cars.
GDP would go up, as repairs were made, insurance companies hired more staff, Car Hire, taxis were used more often.
But nothing of any REAL economic value was created, and it was a one off event.
GDP is a broad measure of activity, as sort of BMI of the economics world
Unless there is some evidence that recent growth figures have been distorted by a massive increase in car crashes, this is irrelevant.If everyone in the UK went out today and crashed their cars.
GDP would go up, as repairs were made, insurance companies hired more staff, Car Hire, taxis were used more often.
But nothing of any REAL economic value was created, and it was a one off event.
GDP is a broad measure of activity, as sort of BMI of the economics world
Gargamel said:
GDP would go up, as repairs were made, insurance companies hired more staff, Car Hire, taxis were used more often.
Agreed, debt is the other side of the equation - if the increase in car repairs is not offset by a corresponding decrease in consumer expenditure in other areas or a fall in profits for insurance companies leads to smaller bonuses, firings or dividend payouts etc.Dr Jekyll said:
Unless there is some evidence that recent growth figures have been distorted by a massive increase in car crashes, this is irrelevant.
Sorry, what? The OP has asked how the figure is calculated, I have shown that some things included in GDP aren't necessarily adding to the true wealth of the country. I.E. if you repair any machinery, it counts as "activity" - you could in theory have an awful lot of such activity counting towards growth, but at the end of the day still have the same number of machines/cars whatever as you had at the start.
It is a part of the make up of GDP, it isn't irrelevant, and perhaps rather than fairly obtuse remarks, you might like to contribute something positive instead of being snippy !
Gargamel said:
Dr Jekyll said:
Unless there is some evidence that recent growth figures have been distorted by a massive increase in car crashes, this is irrelevant.
Sorry, what? The OP has asked how the figure is calculated, I have shown that some things included in GDP aren't necessarily adding to the true wealth of the country. I.E. if you repair any machinery, it counts as "activity" - you could in theory have an awful lot of such activity counting towards growth, but at the end of the day still have the same number of machines/cars whatever as you had at the start.
It is a part of the make up of GDP, it isn't irrelevant, and perhaps rather than fairly obtuse remarks, you might like to contribute something positive instead of being snippy !
For example the restauarant meal you had last week. No change in net wealth because the only thing produced has gone...well lets not discuss that.
But there has been economic activity, that contributes to the GDP and that is considered the best indicator of the health of an economy.
Inflation is nothing like what was quoted earlier
GDP allows for that anyway as has been said
Net migration much smaller than the GDP (not sure of the exact figure, but less than 0.5% anyway).
So that is real growth in the economy whether or not the sceptics have experience it.
Combined with the continued fall in unemployment this is all good news. Can't imagine why some people are so miserable about it.
I'm a casual economic observer so I do not have the exact figures or the links, but in two separate reports I have seen that 4th quarter GDP was only 0.5% and weaker than expected, and that the deficit was increasing.
Yet any interview with any Conservative MP that touches upon economics, is met with the proclamation that the deficit "has been halved" and that the economy is improving
Yet any interview with any Conservative MP that touches upon economics, is met with the proclamation that the deficit "has been halved" and that the economy is improving
JustAnotherLogin said:
Well you do seem to have missed the point of the lesson. There are lots of transactions that do not increase the "net wealth" of the country.
For example the restauarant meal you had last week. No change in net wealth because the only thing produced has gone...well lets not discuss that.
But there has been economic activity, that contributes to the GDP and that is considered the best indicator of the health of an economy.
Inflation is nothing like what was quoted earlier
GDP allows for that anyway as has been said
Net migration much smaller than the GDP (not sure of the exact figure, but less than 0.5% anyway).
So that is real growth in the economy whether or not the sceptics have experience it.
Combined with the continued fall in unemployment this is all good news. Can't imagine why some people are so miserable about it.
Indeed the continued fall in unemployment is a big deal. Labour are tryign to pretend it is nothing, but actually it is pretty miraculous and something most Western economies now would kill for. For example the restauarant meal you had last week. No change in net wealth because the only thing produced has gone...well lets not discuss that.
But there has been economic activity, that contributes to the GDP and that is considered the best indicator of the health of an economy.
Inflation is nothing like what was quoted earlier
GDP allows for that anyway as has been said
Net migration much smaller than the GDP (not sure of the exact figure, but less than 0.5% anyway).
So that is real growth in the economy whether or not the sceptics have experience it.
Combined with the continued fall in unemployment this is all good news. Can't imagine why some people are so miserable about it.
menousername said:
I'm a casual economic observer so I do not have the exact figures or the links, but in two separate reports I have seen that 4th quarter GDP was only 0.5% and weaker than expected, and that the deficit was increasing.
Yet any interview with any Conservative MP that touches upon economics, is met with the proclamation that the deficit "has been halved" and that the economy is improving
That is the figure for the 4th quarter - down from 0.7% in the others. Even if continued that would still be a healthy 2% growth. Economists seem to be divided as to whether it is a slowdown or a blip (no surprise there)Yet any interview with any Conservative MP that touches upon economics, is met with the proclamation that the deficit "has been halved" and that the economy is improving
I think the deficit in monetary terms is now coming down a bit, but as % of GDP it has been halved, i.e. my mortgage is now only £1000pcm (if only), but my income has gone up so it is now only 1% of my income instead of 2%. The proportion it is of GDP defines how affordable it is. Someone posted the actual figures recently but I haven't time to look now
JustAnotherLogin said:
menousername said:
I'm a casual economic observer so I do not have the exact figures or the links, but in two separate reports I have seen that 4th quarter GDP was only 0.5% and weaker than expected, and that the deficit was increasing.
Yet any interview with any Conservative MP that touches upon economics, is met with the proclamation that the deficit "has been halved" and that the economy is improving
That is the figure for the 4th quarter - down from 0.7% in the others. Even if continued that would still be a healthy 2% growth. Economists seem to be divided as to whether it is a slowdown or a blip (no surprise there)Yet any interview with any Conservative MP that touches upon economics, is met with the proclamation that the deficit "has been halved" and that the economy is improving
I think the deficit in monetary terms is now coming down a bit, but as % of GDP it has been halved, i.e. my mortgage is now only £1000pcm (if only), but my income has gone up so it is now only 1% of my income instead of 2%. The proportion it is of GDP defines how affordable it is. Someone posted the actual figures recently but I haven't time to look now
Gargamel said:
JustAnotherLogin said:
Well you do seem to have missed the point of the lesson. There are lots of transactions that do not increase the "net wealth" of the country.
For example the restauarant meal you had last week. No change in net wealth because the only thing produced has gone...well lets not discuss that.
But there has been economic activity, that contributes to the GDP and that is considered the best indicator of the health of an economy.
Inflation is nothing like what was quoted earlier
GDP allows for that anyway as has been said
Net migration much smaller than the GDP (not sure of the exact figure, but less than 0.5% anyway).
So that is real growth in the economy whether or not the sceptics have experience it.
Combined with the continued fall in unemployment this is all good news. Can't imagine why some people are so miserable about it.
Indeed the continued fall in unemployment is a big deal. Labour are tryign to pretend it is nothing, but actually it is pretty miraculous and something most Western economies now would kill for. For example the restauarant meal you had last week. No change in net wealth because the only thing produced has gone...well lets not discuss that.
But there has been economic activity, that contributes to the GDP and that is considered the best indicator of the health of an economy.
Inflation is nothing like what was quoted earlier
GDP allows for that anyway as has been said
Net migration much smaller than the GDP (not sure of the exact figure, but less than 0.5% anyway).
So that is real growth in the economy whether or not the sceptics have experience it.
Combined with the continued fall in unemployment this is all good news. Can't imagine why some people are so miserable about it.
Gargamel said:
Dr Jekyll said:
Unless there is some evidence that recent growth figures have been distorted by a massive increase in car crashes, this is irrelevant.
Sorry, what? The OP has asked how the figure is calculated, I have shown that some things included in GDP aren't necessarily adding to the true wealth of the country. I.E. if you repair any machinery, it counts as "activity" - you could in theory have an awful lot of such activity counting towards growth, but at the end of the day still have the same number of machines/cars whatever as you had at the start.
It is a part of the make up of GDP, it isn't irrelevant, and perhaps rather than fairly obtuse remarks, you might like to contribute something positive instead of being snippy !
Dr Jekyll said:
No, the question was how GROWTH was calculated, not GDP. Since activity such as repairs included in the current GDP were also included in the previous GDP, they are irrelevant to the issue of where the growth came from.
Fair play, I see your angle I guess my response regarding car crashes is an example of how GDP does not call out the instances of real wealth creation over mere activity.
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