Britain never had a double dip recession – and that doesn't matter

The magic of GDP revisions.

The ONS has released a bumper set of GDP revisions, taking a fresh look at the national output all the way back to 1997. The headline points:

  • The recession in 2009 was much more severe than previously thought. The agency has revised its estimate of the 2009 contraction from 4 per cent of GDP to 5.2 per cent; an increase of a third.
  • A change of 0.1 percentage points has erased the "double-dip" recession in 2011. The contractions in Q4 2011 and Q2 2012 still exist, but Q1 2012 is now estimated to have had exactly 0.0 per cent growth; the wiggle thus no longer qualifies as a technical recession.
  • Historically, the 2001 slump after the dot-com boom also appears to have been much worse than previously thought. Rather than the economy growing by 2.9 per cent that year, it grew by 2.2 per cent, a revision of 0.7 percentage points.

The immediate effect of the revision is political. The double-dip recession has been extraordinarily damaging for the Government, allowing the Opposition a concrete fact to point to to back up the claims that they "inherited growth and provided recession". The revisions eliminate the negative growth in one quarter, and mean that that period no longer meets the requirement of two or more consecutive quarters of negative growth which defines a recession.

But that is a technicality of the highest order. The estimate for growth over those three quarters combined is exactly the same as it was yesterday: a contraction of 0.6 per cent. All that has happened is that the timing of some of that contraction has shifted. Q2 2012 is now thought to be marginally worse, and Q1 2012 is now thought to be marginally better.

In other words, as I said back in April 2012, technical recessions don't matter. They impose an artificial dividing line between "good" and "bad" growth, when in fact, going by yesterday's stats or today's, that period is and always was mediocre. Horribly, cripplingly mediocre.

Anaemic growth is just as bad as a technical recession. In many ways, it's worse; whereas technical recessions are at least expected to end, the stagnation which we are living at the moment has stretched out for almost half a decade, and could well last almost half a decade more.

The more interesting fact is that the recession and depression have been massively increased in size. Since 2008, the economy has actually contracted by 1.1 per cent more than we thought. That increases the so-called "productivity puzzle": why has unemployment been falling while GDP hasn't been increasing? That puzzle is partially solved with the realisation that the labour market improvement stopped six months ago; but there still appears to be a disconnect between the two measures. The commonly cited solution to the puzzle is to argue that labour productivity has dropped; but even that just pushes the question further down the tree. Why is our productivity down so much?

But the number one take-home lesson from all of this is: GDP is actually kind of crappy. It's estimated from samples several steps removed from actually "measuring the size of the economy". It misses out huge sectors of the economy, from unpaid caring and parenting to increasingly mainstream aspects of the shadow economy like transactions in bitcoin. And it's wrong; sometimes for decades on end.

Perhaps we should take the advice of former MPC member Andrew Sentence (who has been predicting this recession would be revised out of existence for a year), and focus on more important and less volatile indicators like unemployment and business activity. Not only would that reduce the risk of rewriting history: it would also mean that doing well could no longer be defined as "not failing".

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Can the disciplined Democrats defeat Trump’s maelstrom of chaos?

The Democratic National Convention has been exquisitely stage-managed and disciplined. But is it enough to overcome Trump’s news-cycle grabbing interventions?

The Democratic National Convention did not begin auspiciously.

The DNC’s chair, Debbie Wasserman Schultz, was unceremoniously launched as if by an ejector-seat from her job on the eve of the convention, after a Wikileaks dump of internal emails painted a picture of a party trying to keep the insurgent candidate, Vermont senator Bernie Sanders, from blocking Hillary Clinton’s path to the nomination.

One email, in which a staffer suggests using Sanders’ Jewish faith against him as a candidate in order to slow his insurgent campaign, was particularly damning in its optics and Schultz, who had tweeted with some hubris about her Republican opposite number Reince Priebus during last week’s Republican convention in Cleveland, had to fall on her sword.

Clinton’s pick of Tim Kaine as a running-mate – a solid, safe, and unexciting choice compared to a more vocal and radical campaigner like Elizabeth Warren – was also criticised, both by the media, with one commentator calling him “a mayonnaise sandwich on wholewheat bread”, and by the left of the party, who still held out hope that the Democratic ticket would have at least one name on it who shared the radical vision of America that Sanders had outlined.

On top of that, Kaine, who is a Catholic, also disappointed many as a vice-presidential pick because of his past personal history of opposition to abortion. Erin Matson, the co-director of the reproductive rights group ReproAction, tweeted that Kaine being added to the ticket was “tremendously disappointing”.

On the other side, Donald Trump had just received a poll bump following a terrifying speech which recalled Richard Nixon’s 1968 convention address. Both speeches appealed to fear, rather than hope; many are calling Trump’s keynote his “Midnight in America” speech. Just before the Democrats convened, analyst par excellence Nate Silver and his site, 538.com, forecast Trump’s chance of victory over Clinton in November at above 50 per cent for the first time.

On top of that, Bernie Sanders more vocal supporters arrived at the Democratic convention – in Philadelphia in the grip of a heatwave – in relative force. Protests have already been more intensive than they were at the RNC, despite all expectations to the contrary, and Sanders delegates disrupted proceedings on the first day by booing every mention of Hillary Clinton’s name.

But then, things appear to turn around.

The second day of the convention, which saw Hillary Clinton formally nominated as the first female presidential candidate in American history, was less marred by protest. Bernie Sanders addressed the convention and endorsed his erstwhile rival.

Trump’s inability to stop prodding the news cycle with bizarre non-sequiturs turned the focus of what would otherwise be a negative Democratic news cycle back onto him; an unforced error which led to widespread, if somewhat wild, speculation about his possible links with Putin in the wake of the news that Russia had been behind the email hack and lightened some of the pressure on the Democrats.

And then Michelle Obama took the stage, delivering an oration of astonishing power and grace (seriously, watch it – it’s a masterclass).

Compared with the RNC, the Democratic National Convention has so far been exquisitely stage-managed. Speakers were bookended with pithy, designed-for-virality videos. Speakers started on time; headliners played in primetime.

Both Trump and Clinton have now addressed their conventions before their headline speech remotely, via video link (Trump also engineered a bizarre early-convention pro-wrestling-style entrance), which put observers of both in mind of scenes from V for Vendetta.

But the imagery of Clinton’s face appearing on screen through a graphic of shattering glass (see what she did there?) will likely be one of the moments that sticks most in the memory of the electorate. It must kill the reality TV star to know this, but Clinton’s convention is getting better TV ratings so far than the RNC did.

Michelle Obama’s masterful speech in particular provided stark contrast with that of Melania Trump – an especially biting contrast considering that parts of the latter’s speech last week turned out to have been plagiarised from the former. 538’s forecast saw Clinton slide – barely – back into the lead.

A mayonnaise sandwich Tim Kaine might be, but he is nonetheless looking like a smart pick, too. A popular senator from a key swing state – Virginia – his role on the ticket is not to be a firebrand or an attack-dog, but to help the former secretary of state reach out to the moderate middle that Trump appears to be leaving entirely vacant, including moderate Republicans who may have voted for Mitt Romney but find Trump’s boorish bigotry and casual relationship with the truth offputting. And the electoral mathematics show that Trump’s journey to victory in the electoral college will be extremely difficult if Kaine swings Virginia for Clinton.

Ultimately, the comparison between the Democratic convention in Philadelphia so far and last week’s chaotic, slapdash and at times downright nutty effort in Cleveland provides a key insight into what this election campaign is going to be like: chaos and fear on one side, but tight discipline on the other.

We will find out in November if discipline is enough to stop the maelstrom.

Nicky Woolf is a writer for the Guardian based in the US. He tweets @NickyWoolf.