Recession Graph 5

I’ve managed to get a US GDP graph which quite graphically shows the car crash that was 2008 – and below it a UK GDP graph which shows the lag. One source I spoke to today reckoned that Feb was worse than Jan in terms of their business. I have to say that London was a ghost town today. The lag continues and 2009 will get much more gloomy before it gets glimmery:

Gross Domestic Product (GDP) Graph

United Kingdom GDP Growth Rate


2 Responses to “Recession Graph 5”

  1. 1 barleydale April 24, 2009 at 3:41 pm

    What people don’t seem to realise is that falls in GDP are not so much an idicator of falls in economic activity but falls in the value thereof. In the UK they cut the VAT rate by 2.5% and if the UK’s GDP figures – the value in money terms of all goods and services supplied, the vast majoruty of which are subject to VAT – include VAT then of course the GDP is going to fall by 2.5% in a year just to reflect the VAT cut. That does not mean economic activity is slowing. Also, prices in general are now falling – the RPI in the UK is in negative territory and that again will impact on the GDP figures. In conclusion, so long as VAT remains reduced, busineses cut prices and inflation is in negative territory the GDP will show corresponding falls. The true situation may be that economic activity is increasing – more goods and services are being sold – but if they are being sold at a lower price and with less VAT on them, then of course GDP will fall, but not necessarily economic activity, which might even be booming!

    • 2 itllallendintears June 3, 2009 at 2:11 am

      hehe. yep, those unemployed are really splashing out now the cheques are rolling in…

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