Lies, damned Lies …. and the Office of National Statistics

Who read recent headlines and thought that the recovery from recession was greater than expected? Me too! 

When the ONS announced its growth revision upwards from 0.1% in Q4 ‘09 to 0.3% I thought, well its not much more, but what good news. That was until I realised that the revised Q4 figures are actually worse than originally announced, and the “improvement” is only because Q3 was even worse than originally thought. Instead of producing £315,845m in Q4 UK Plc produced £315,712 and yet today’s headline makers fell for the spin and heralded an improvement.

And worryingly the ONS press release accompanying the figures was titled “Services growth in December pushes up GDP estimate”. I say worryingly, because the ONS ‘ own headline is just plain misleading given it is so wrong.

The report actually suggests that Q4’s growth was on the back of car manufacture and retail sales. With the car scrappage scheme in its final stages and VAT already returned to 17.5%, I wonder what Q1 2010 will reveal?

My own view is that our recovery will turn out to be more of a “bounce along the bottom” for two or three more quarters, with the possibility of either Q1 or Q2 2010 showing a retraction. Hopefully not two consecutive quarters to herald the dreaded “double-dip”, and subsequent difficulties in financing the national debt… but that cannot be ruled out. The tough economic times are certainly nowhere near over.