When it comes to the economy I usually find that anecdotal evidence is far more interesting, and usually more reliable, than economists’ figures.
Firstly anecdotes tell us what people are really experiencing rather than aggregating numbers, and secondly they tell the story of the economy in real time — no need to wait for verified statistics months after the event.
The anecdotes are telling a story of people still struggling a year after the recession has supposedly passed. For many this week’s GDP figures showing a 4.8% growth rate is cold comfort.
Despite interest rates at their lowest in decades, price hikes around electricity and petrol are biting. People are still battling to pay down debts and small businesses are teetering on the brink.
Unemployment figures remain stubbornly at 25% as the economy struggles to re-absorb those jobs lost during the recession.
The head of a private school told me that the first term of this year was the worst in history in terms of non-payment of school fees. She also sits on the board of several other schools who are all sharing the same experience.
A friend who is involved in the advertising side of retail told me that his business this year has been a matter of stop, start, stop, start. “Retailers are very nervous about spending money on advertising and when they do they want it immediately and to see the results immediately, not in six months’ time”.
This confirms the figures we have seen from retail, which have waxed and waned. The strong GDP figures have come from manufacturing, which is positive for future employment rates, but it is clear this has not yet translated into a more robust consumer.
This brings to mind a conversation I had with scenario planner Clem Sunter in 2009. At the time he argued that we were entering into an economic period that would resemble the global economy from 1969 to 1976, a period that was marked with many false recoveries as the economy struggled to find traction.
He argued that we were entering not into a V-shaped recovery, or even a U-shaped recovery, but rather a U-shape with a corrugated bottom. The high frequency of economic data over the next few months will confirm whether or not he is correct, but I suspect when we look back over the period from 2009 to 2013 his analysis will look prophetic.
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