• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Economic and market briefing: GDP Releases

0
  • by James Bevan
  • in Blogs · James Bevan
  • — 22 Nov, 2012

Last week witnessed a large number of GDP releases, most of which were quite negative in their messages. Therefore:

–          Unsurprisingly, the slumps in the Euroland periphery continued apace and although both Germany and France reported some positive growth rates over the quarter, the amounts were limited, did not involve an improvement in nominal GDP growth rates, and appeared worryingly to be the result of an assumed and probably unsustainable improvement in net exports.

–          Japan on the other hand witnessed an unsurprising decline in its net exports that brought its overall level of GDP down quite sharply but its level of real domestic demand was actually up 1.6% year on year, despite the ending of the government’s green consumption subsidies. Indeed, the fall in Japanese domestic demand during Q3 was quite modest in the circumstances.

–          Elsewhere, we find that much of the Asian GDP data was also relatively soft during the third quarter

–          Even at 2.0% annualised, the US real GDP growth numbers were well below the consensus estimate of the US’s perceived trend rate of growth (although it may well have been in line with likely current and future trend of US growth).

Of course, few if any of these numbers were surprising (although Japan’s data were interesting) and most of the numbers released were close enough to consensus estimates not to lead to too much fuss in the markets.

But, it should not be forgotten that in aggregate the GDP numbers clearly suggest that the global economy is growing at a rate that is well below its trend rate and therefore that the global negative output gap may be widening and that demand pressure is falling further below trend at present.

This would seem to represent a very dis-inflationary or even deflationary scenario, and it would certainly seem that so far at least, the various Quantitative Easing (QE) regimes have failed either to close the negative output gap or create the higher rates of inflation that some expected.

This failure is likely to lead policymakers to look for new levers. There is a clear risk that the policies brought forward are not centred on structural reforms to improve the supply side, which we and markets generally would welcome, but are instead focused on increasing state intervention in markets and economies. An attempt at developing a more ‘mixed economy’ might be welcomed by those who believe that the free market has failed, but any heavy handed or mis-guided intervention would be poorly received by markets.

James Bevan is chief investment officer of CCLA, specialist fund manager for charities and the public sector. CCLA launched The Public Sector Deposit Fund in 2011 to meet the needs of local authorities and other public sector organisations. You can follow James on twitter @jamesbevan_ccla

Share

You may also like...

  • Taking stock: equity investment within the LGPS Taking stock: equity investment within the LGPS 12 Nov, 2018
  • Spending Review: Rainy day funds still needed despite generous settlement Spending Review: Rainy day funds still needed despite generous settlement 11 Sep, 2019
  • James Bevan: Pick stocks, don’t buy indices James Bevan: Pick stocks, don’t buy indices 17 May, 2016
  • James Bevan: Inflation and demographics James Bevan: Inflation and demographics 8 Nov, 2016

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 1 day ago

    How can local government ‘build back better’?: Beverley Gower-Jones looks at the options for driving small business entrepreneurship in clean technologies. Innovation is essential for local authorities to save money and reduce emissions, it is the… dlvr.it/RtT3nS pic.twitter.com/bSMB6OG70t

    Room151 1 day ago

    Helen Randall: Spelthorne report places spotlight on ‘controls’: Fresh criticism of Spelthorne Council raises the question of what “good” controls look like when negotiating a property deal. Spelthorne Council’s continuing debacle over property… dlvr.it/RtSPhy pic.twitter.com/9uCOJgBcH6

    Room151 1 day ago

    Step-out strategies: Hitting the sweet spot between liquidity and ultra-short duration: Sponsored article: Jemma Clee describes how an ultra-short duration strategy can help local authorities enhance returns. Despite the expectation of a low, and… dlvr.it/RtSPZb pic.twitter.com/pdXPpv5lcN

    Room151 2 days ago

    What role will climate change have on the pricing of government bonds?: Sponsored article: Kerry Duffain finds that “vulnerability and resilience to climate change” have a significant impact on the cost of government borrowing. Ardea Investment… dlvr.it/RtNKv7 pic.twitter.com/wDjT31x4Yt

    Room151 3 days ago

    ESGenius: Slashing emissions will fuel green growth for decades: Sponsored article: Velislava Dimitrova argues that a big enough investment could mean transition to a low, or no, carbon economy can become a reality. The world needs to slash carbon[...] dlvr.it/RtKZJp pic.twitter.com/cd8S3ijERl

    Room151 3 days ago

    Prudential code: “Not perfect, but its heart is in the right place”: The new Prudential Code offers revised rules for borrowing. Nikki Bishop is sceptical it will work while Gary Fielding offers his support. Nikki Bishop I have been asked to give[...] dlvr.it/RtKZFh pic.twitter.com/OriN28lXcb

    Room151 4 days ago

    Tremendous report from @MarkSandford3 citing @room_151 no fewer than six times (despite what the @lgcplus fact checking/counting dept might tell you) #localgov commonslibrary.parliament.uk/research-brief… 1/5

    Room151 2 weeks ago

    Dan Bates: Capitalisation directions are not the only tool for rebuilding finances: Dan Bates argues deep seated problems are contributing to a rush for capitalisation directions. For some time now we have been reading that a number of councils are in… dlvr.it/RspKff pic.twitter.com/xRRsgVim9u

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Politics and policies in China
  • Next story Maximum business rates levy 50p in the pound

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.