Tuesday, March 29, 2011
Fourth quarter GDP - the devil's in the detail
Posted by David Smith at 06:00 PM
Category: Thoughts and responses

Some interesting aspects to the second revision (the third release) of the fourth quarter gross domestic product data. Household disposable income fell by 0.5% in Q4. matching the revised drop in GDP. GDP grew by 1.3% in 2010 (just) on the basis of the revised figures.

What's striking about the household income figures is how much they jump around. So the quarterly sequence during 2010 was plus 0.3%, minus 1.4% (a quarter when GDP grew by 1.1%), plus 0.5%, minus 0.5%.

If you were to conclude that it is hard to get a handle on the disposable income numbers you would be right. There was similar volatility during 2009. The big picture of a squeeze on incomes remains intact, as does the fact that we are still waiting for net trade to boost growth. Gross domestic expenditure was flat in the fourth quarter. More here.

Martin Weale of the Bank of England's monetary policy committee has given a speech on "Uncertain Uncertainty". Interesting and, as far as the markets are concerned, he is sticking to his call for a rate hike. The speech is here.