DC writes: help us finish the job

Prime Minister David Cameron writes ...

"This week there have been more signs that Britain is turning a corner.
 
"On Wednesday the news came that there are now a million more people in work under this Government. Then yesterday we saw that crime has fallen by over 10 per cent since the election.
 
"On top of our cut in National Insurance for small businesses - introduced to Parliament on Monday - it's been an encouraging week.
 
"But there must be no complacency. The struggle of the past few years will only be worth it if we finish the job we started.
 
Join Team 2015 today and be part of our push to win the next election outright.
 
"We're not going back to the bad old days under Labour - where you had bankers paying less tax than their cleaners and towns with a quarter of people trapped on benefits.
 
"Let's never lose sight of what we're fighting for: a recovery that all hardworking people can share in. Good, decent, well-paid jobs. Welfare that gets people back into work. Schools that help every child achieve their dreams.
 
"Inch by inch, step by step, we're getting there. Let's keep going.
 
Help us fight the next election and finish the job we started.
 
Have a good weekend.
David Cameron signature
David Cameron

Comments

Jim said…
economic recovery is not what we are are seeing, what we are seeing is rising nominal GDP.

These are different things, GDP reflects money leaving a market. Usually in the form of bonds seeking a more attractive interest rate.

this is great for a small eection of the population (bankers,investors and stock traders) But its not so great for those on fixed incomes, pensions or even benefits (the bulk of the population) as prices rise well before wages do, thus their purchasing power, and hense living standard declines.

the problem is that interest rates have been held artificially too low for far too long, while the movement of bonds does cause the nominal gdp to raise, but economic progress to fall. This will fail eventually and hopefully not too late. Those bond yeilds will put immense pressure on interest rates, more than the BoE can control, thus finally pushing up interest rates by a substantial amount.

Take another area, housing. Now ideally people would be able to afford a small house in their area, but they cant, due to an overpriced market, now you could make it easier for people to borrow more money thus further increase the price of houses, and helping to maintain the inflated price. But its batter to allow the market to correct itself and house prices to fall to their normal level.

People feel good when house prices rise and politicans like that, but its hardly progress and good news for people looking to buy their first, or even to rent one.

It often seems mad to me that everyone cheers when house prices go sky high, but rails when the price of electricity the house uses does the same thing.
Chris Whiteside said…
No, what we are seeing is rising GDP after adjustment for inflation.

Real GDP is not growing nearly as fast as most of us would like and it is unfortunately not yet translating into rising living standards for most people - hence DC was right to say what we want to see is "a recovery which all hardworking people can share in."

But GDP it is growing in inflation-adjusted terms as well as nominal terms.

You may remember "Whiteside's law of real terms" a few weeks ago - that bad news "in real terms" will be perceived as all too real while good news "in real terms" will be perceived as wholly imaginary.

Because living standards are not reflecting growth the limited recovery we are seeing is an excellent example of Whiteside's law. That does not mean that there is no genuine economic growth.
Jim said…
Don't get me wrong. I hope you are right. Sadly, though, I don't think you are. The first sign of the credibility of what I was saying will come in the form of raising interest rates earlier than expected

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