It was a rough day on the economics beat here in Washington. Rough in terms of America’s hopes for a strong economic recovery, that is.
Let’s recap. At 8.30am, the labor department released its weekly jobless claim figures. They were up unexpectedly to 472,000. Back in April, when job creation seemed to gathering momentum, many economists were looking at the stubbornly weekly jobless claims data as an aberration. Eventually, the numbers would have to move closer to 400,000. But now, the opposite seems true and private payroll growth looks destined to be modest, with persistently high unemployment and therefore high jobless claims. We’ll know more tomorrow from the more important monthly government jobs report, but still, the labour market outlook is not rosy.
Then, at 10am, a double punch in the face. The ISM manufacturing index dropped a lot more than expected in June, suggesting that one of the bright stars of the recovery is beginning to fade. Most economists knew that after inventories were restocked, there would be some loss of momentum.
For all the turmoil in the markets over the past month, economists at the top US banks remain reasonably bullish about the future.
The American Bankers Association said its economic advisory committee, chaired by Stuart Hoffman of PNC Financial, believes there will be no “double-dip” recession in the US, which will instead experience a “moderate but solid” recovery with growth of 3 per cent this year and next.
More diversification, more lending, decent growth, but no capital taxes. That’s the message from Alexei Ulyukayev, first deputy chairman of Russia’s central bank. (Confusingly, there seem to be three first deputies.)
Mr Ulyukayev has been busy talking to reporters today. He has announced:
The end of a decade is a time for reflection, and people in Britain’s Labour party might want to think why the public have have fallen out of love with them. There are competing theories, but the deteriorating economic position must rank high.
My colleague Norma Cohen noted over the Christmas period that the Noughties witnessed the lowest average growth of any decade since the Second World War. The chart below takes this analysis further by looking at gross domestic product per head for every quarterly overlapping decade since 1955, when quarterly national accounts in their current form were first published. If people look back a decade now, it is as bad as the late 1970s/early 1980s when Britain was the sick man of Europe. No wonder the public aren’t relishing another Labour government. It doesn’t make the Bank of England’s record as an independent central bank look that exciting, either: the longer-term performance has been declining steadily ever since Mervyn King become governor in 2003.
The Office for National Statistics has today published a paper defending its early estimates of Gross Domestic Product against criticisms that the figures are not worth the paper they are written on. But its case rests entirely on trust, writes Chris Giles of the Financial Times, and does not address the external concerns about its data.