Economics

Due to a mix of scarce resources, methodological difficulties and poor incentives, much of the data collected on the world’s poor is either inaccurate or missing. That’s one of the findings of a study being released today by the Overseas Development Institute (ODI) at the Cartagena Data Festival in Colombia.

While the trend of falling poverty is genuine, the ODI think that numbers in poverty may be being understated by up to 350 million, more than the entire population of the US. Read more

David Cameron is taking a leaf from Shinzo Abe’s book. “It’s time Britain had a pay rise,” the UK prime minister plans to tell business leaders on Tuesday (unlike the Japanese prime minister, he will deliver his message in a speech rather than over a few rounds of golf.) It seems like a political no-brainer with an election in May and a workforce that has suffered six years of real terms pay cuts. But is it really that simple? And what can Mr Cameron do about it anyway? Here are six charts that explain what is really going on.

1. It’s true that UK workers have suffered a brutal real-terms pay cut since the crisis.

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The world is awash with even more debt than before the financial crisis. Use the FT interactive tool to compare countries’ debt levels Read more

Earlier this week the charity Oxfam released a paper ahead of the world economic forum in Davos that claimed that the wealthiest 1 per cent of the world’s population were on track to own half the world’s wealth by 2016.

Others have pointed out problems with this data. To calculate an individual’s wealth the Credit Suisse data takes debts away from assets to give a figure for net wealth. Anyone with debts greater than their assets has negative wealth. Read more

There are signs that the 40 per cent fall in oil prices might not deliver the expected stimulus. Chris Giles assesses the outlook for the global economy while FT reporters look at the prospects for key exporters and importers.

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The UK’s information technology sector could be about 40 per cent bigger than previously though, with at least 70,000 more ICT companies in operation.

That’s according to the National Institute of Economic and Social Research who have come up with a pretty novel way of measuring the size of Britain’s tech sector using one of the industry’s most hyped concepts ‘big data’.

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In the aftermath of the financial crisis the world saw an increase in the number of street protests. Many inspired by perceived connections between the political elite and business interests; Occupy Wall Street and Los Indignados in the west to the Arab Spring and the protests against Victor Yanukovich in Ukraine. A new working paper from the National Bureau of Economic Research presents evidence on their power.

Daron Acemoglu, Tarek Hassan and Ahmed Tahoun examines the correlation between street protests in Egypt and the stock market returns for firms connected to former president Hosni Mubarak’s National Democratic Party (NDP), the Muslim Brotherhood and the Egyptian military. Read more

Even before the dispute with Russia began battering their economy, hundreds of thousands of Ukrainians fled their country looking for a better life elsewhere. Ukrainians are now the largest group of migrants from non-European Union countries applying for residence in the bloc.

Eurostat said on Wednesday that the number of Ukrainians issued with EU residence permits rose by 48 per cent in 2013. Most Ukrainians moved to Poland looking for work. In total 236,691 permits were granted to Ukrainians, which means that the country has overtaken the US as the most common source country for migrants to the EU — India has also overtaken the US to take second place. Read more

 

More people lived in urban than rural areas for the first time ever in 2007. This year it is estimated that 54 per cent of the world’s population live in cities and by 2050 it is predicted to hit 66 per cent, a mirror image of the two-thirds living in rural areas at the mid-point of the twentieth century. This is expected to come about as development fuels mass internal migration in Africa and Asia. The UN makes no effort to standardise individual countries definitions of urban: population numbers, density and the proportion not working in agriculture and other are all used by different statistical offices.

The price of salad is about to jump after prices for olive oil, lettuce and tomatoes have soared following a lengthy drought in Spain. Read more

So the UK economy grew 0.8 per cent in the second quarter of 2014, leaving output on this preliminary estimate at just about the previous peak set in Q1 2008, over six years ago. For an economy that produces almost £400bn a quarter in gross domestic product, exceeding the previous peak by £752m is really small beer, as our first chart below the break shows.

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Keith Fray

The UK economy has finally recovered. Today’s estimate by the Office for National Statistics of gross domestic product for the second quarter takes output (adjusted for inflation) to a new high, above the level of the first quarter of 2008*.

Hurrah. But, although welcome, this is nothing to celebrate. The government will not be ordering church bells to be rung. That the sum total of everything produced in the economy is only now returning to the levels of six years ago is astonishing. To give some context, the recession and recovery have lasted about nine months longer than the second world war. Read more

Does knowing more about finance lead to making better investment decisions?

It might if you believe a working paper from the US National Bureau of Economic Research, published yesterday. By matching records from an unnamed company’s pension scheme and responses to a survey asking some basic questions about finance, they “find that risk-adjusted annual expected returns are 130 basis points higher for the most financially knowledgeable employees.” The questions used in the survey can be found in the quiz below. Read more

The Office for National Statistics has, for the first time, included estimates of the impact of prostitution and illegal drugs in the national accounts. By the ONS’ reckoning they add about £10bn to the British economy.

Estimates of anything to do with the black economy are always going to be uncertain at best, but the statistics available are pretty interesting. Read more

Before a measure of inequality can be calculated there are some questions that need to be answered: Chiefly, equality of what? Living standards? Wealth? Income? Or, perhaps, opportunity?

And what do you include? Is income measured before tax and benefits, or after? Do you include public goods in measures of living standards? How do you account for public assets and debts in wealth?

And who are the relevant people? The whole world or one country? Do you include students and children or just adults of working age?

The level of inequality measured will always depend on how these questions are answered.

The British Wealth and Assets survey, released today, provides measures of inequality in private wealth (so not including public debts and assets) between different households.

And households come in different shapes and sizes.

Individuals who are married or widowed are the most likely to live in a wealthier household. Whereas those who are separated, divorced or single are the least likely.

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Wage growth has risen by more than inflation for the first time since 2010 and employment has grown by the largest amount for 24 years, according to figures released by the ONS today.

Given this context its worth taking a look at the performance of Britain’s labour market since the 2008 financial crisis.

1. Despite lacklustre GDP growth employment has been steadily increasing since 2010. Read more

By Paul Hodges

The toy industry is going through difficult times as Lex highlighted recently. Profits at Toys R Us have halved since 2009, whilst Mattel is suffering due to poor sales of Barbie dolls. A dismal Christmas at the UK’s Mothercare led the departure of its chief executive. Read more

The New York Times asked yesterday whether Americans with a car in the driveway, a flat-screen television and a computer with an Internet connection can be described as “poor”.

In the United States, material goods – televisions, computers and cars – are at their most affordable in ten years, all having steadily dropped in price since 2005.

However, the cost of items that have traditionally helped pull Americans out of poverty – education, childcare and healthcare – have become far more expensive. Families’ everyday expenses also remain under strain from a steady increase in the cost of food and little change in the price of housing.

What would the same analysis of the cost of living look like in the UK?

We created a UK version of the chart in the New York Times’ story, using real prices calculated from the British consumer price index. The story was pretty similar:

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The recovery in the world’s leading economies is strengthening, according to the Tracking Indices for the Global Economic Recovery, the Brookings Institution-Financial Times index of the global economy.

Explore the index with this interactive graphic. You can read more analysis from Eswar Prasad, Karim Foda, and Arnav Sahu on the Money Supply blog.

The March 19 Budget will be delivered against a background of broad economic positivity, but that tone may not sit well with everyone. Since George Osborne’s speech this time last year, fortunes have been mixed: the labour market has been slow to pick up in the East Midlands, the north has been hit by job closures and production of transport equipment has fallen.