By: Dr. Mike Campbell
The GDP figures are always eagerly awaited by analysts since they provide a good snapshot of whether a country’s economy is stagnant, contracting or growing. However, the initial reading is often adjusted as hard data becomes available and, as with any estimate, the revised figures could go up or down.
In the UK, the revision of the Q3 GDP figure has revealed that growth within the UK was overestimated in the period between June and September. The original estimate of 0.8% has been decreased to show that the UK economy grew by 0.7% in Q3. The Office for National statistics (ONS) has also revised data for Q1 and Q2 down by 0.1% as well.
The revised figures show growth in the first three quarters of 2010 was 1.1; 03 and 0.7% respectively. The ONS has blamed weaker than expected performance in the construction, manufacturing and business service sectors for the downgrade.
In the USA, figures for Q3 GDP have been revised upwards. The previous estimate had put Q3 growth at 2.5% on an annualised basis, but this has now been revised up a notch to 2.6%. The rate of growth in the US economy has been too low to have had any significant effect on unemployment which is still hovering at about 9%.
Unemployment has been at this level for the past 19 months, providing evidence that the recovery from the worst recession since the Great Depression is much more tentative than one would like to see – when demand increases, higher employment levels will follow.
The Federal Reserve mandate covers employment and one of the reasons for the approval of the second, $600 billion, raft of quantitative easing was the hope that added stimulus to the economy would result in the creation of new jobs.