by RogueTrooper
Wed May 13th, 2009 at 08:11:24 AM EST
In today's Guardian Larry Elliot is throwing a little scorn onto those who are saying "happy days are hear again"
Panic over. Six months ago, you could not pick up a newspaper or watch the TV without sensing that the global economy was imploding. Banks were being bailed out, the stock market was in freefall, factories were being mothballed. Shaken to its very foundations, capitalism would never be the same again.
But that was then. Capitalism, it appears, has made a deathbed recovery. It is out of intensive care and, while not quite fighting fit, is doing well in the recovery ward. Another few months should see it as good as new.
Don't be fooled into thinking this is something flammed up by a media suffering waves of ennui after two years charting the path from boom to boost. While Depression chic is now last year's thing, there are reasons to believe the worst of the crisis may be over, certainly for now. Estate agents say buyer interest is running at its highest level in a decade; retail activity last month was the strongest for three years; the decline in factory output in March was just 0.1% - the least bad performance since early 2008.
In case you are going to be easily gulled by the happy talk. Mr. Elliot has given us five key pointers to judge the economic state of Britain by...
One. Dig deeper into the data. While it is true, as the Royal Institution of Chartered Surveyors reported yesterday, that fewer estate agents are reporting price falls than six months ago, the rise has only taken the market back to levels seen during the property crash between 1990 and 1992. As DH Lawrence once said: never trust the artist, trust the tale.
Two. Watch what the central banks do. Last week, the Bank of England kept the bank rate at 0.5%, but more significantly it announced that it was stepping up its quantitative easing programme – creation of new money to compensate for credit lost to the economy from foreign banks and specialist lenders – by £50bn. Threadneedle Street fears that a banking system which has suffered its most grievous shock in a three-quarters of a century remains fragile.
Three. The labour market matters. Optimists seized yesterday on news that the number of people out of work and claiming benefit rose by 57,100 in April – smaller than the 73,700 increase in March and less half the record 136,600 jump in February. But the government's alternative measure of joblessness – the labour force survey – showed unemployment up by almost a quarter of a million in the first three months of the year, the worst performance since 1981. What's more, the halving of City bonuses and the pay freezes imposed by firms means that average earnings are falling for the first time in living memory. That will affect consumer spending power.
Four. Keep an eye out for China. Economic figures from the world's most populous country are notoriously unreliable, with an announced 8% rise in March industrial production sitting oddly with a 3% drop in power use. A sustained rise in Chinese exports would suggest that demand in the rest of the world – particularly the US – has turned. Between March and April, exports fell by 3.5%.
Five. There will be no real recovery until the US housing market stabilises. There have been tentative signs of activity picking up, but mortgage rates are still high, property prices are still falling, the number of people in trouble with their home loans is increasing, and losses for Wall Street banks are mounting. As Gordon Brown never tires of telling us, this crisis began across the pond. And that's where it will end.
There is so much despair still to come.
Update [2009-5-13 8:16:19 by RogueTrooper]: Posted before I had finished copying and pasting someone else's work.
