Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

UK Accelerating Economic Boom, GDP 1.9% 2013, 4% 2014? Conservative Election Win?

Economics / UK Economy Jan 29, 2014 - 04:26 AM GMT

By: Nadeem_Walayat

Economics

The latest ONS UK GDP data showed strong growth for Q4 that lifted annual GDP for 2013 to 1.9%, the fastest growth rate since 2007, and up from the 0.3% of 2012 and that many economists had convinced themselves that the UK was heading for a triple dip recession during 2013.

The UK economy risks suffering from a triple-dip recession amid a period of persistently low growth that will last until the next election, the governor of the Bank of England Mervyn King warned - Nov 2012.


Still despite the positive economic data, academic economists could be find right across the mainstream media focusing on the fact that more workers are working for less pay which is resulting in stagnating GDP per capita, this whilst missing the real big picture as revealed by Britain's latest unemployment data that far fewer workers were let go than during past recessions which has puzzled many journalists such as the BBC's former all things economics Stephanie Flanders, missing the obvious that firms having retained workers at lower productivity therefore have productive capacity primed to easily ramp up production without having to incur costs such as recruitment, higher wages and training, which as I expect will act as huge accelerant for the economy during 2014 and into the May 2015 general election.

Newsnight - 28th Jan 2014

Stephanie Flanders - "Productivity, that puzzle, people worrying about why workers are not making more and why we are not able to make more per head is actually the flip side of living standards issue, because you can only pay workers more when they are making more"

Jeremy Paxman - "I asked Danny Alexander about this and he did not seem to know what the answer was either"

Stephanie Flanders - "No one does, officially we don't know"

The answer is productive capacity - Something the academic economists will only realise AFTER the FACT, well over a year from now, after the next election, after the Conservatives have won and so with the benefit of much hindsight they will be writing reams of worthless text explaining why the economic boom happened and that it was because of firms having a high degree of spare worker productive capacity that allowed firms to expand with little extra increase in costs as compared to past recoveries so that the expansion was not linear but exponential in terms of productivity gains.

UK GDP Forecast 2014

My long standing forecast as of Dec 2009 as illustrated in the Inflation Megatrend ebook (FREE DOWNLOAD), 31 Dec 2009 - UK Economy GDP Growth Forecast 2010 and 2011, The Stealth Election Boom ) and the update following the June Emergency Budget revising 2011 to +1.3% (09 Aug 2010 - UK Economy GDP Growth Forecast 2010 to 2015) was for the UK economy to grow by 1.4% for 2013 and 3.1% for 2014.

  • UK GDP 2010 2.8%
  • UK GDP 2011 = 1.3%
  • UK GDP 2012 = 1.1%
  • UK GDP 2013 = 1.4%
  • UK GDP 2014 = 3.1%
  • UK GDP Mid 2015 = 3.3%

My updated analysis of December 2013 resulted in the following forecast conclusion :

30 Dec 2013 - UK House Prices Forecast 2014 to 2018, The Debt Fuelled Election Boom

Therefore in terms of my economic growth conclusion, I expect the UK economy to at least attain a growth rate of 3.6% for 2014 and target 3.8% for Q1 2015 with a strong possibility of achieving the holy grail for election victories of announcing during the election campaign of 2015 that the UK economy at that time was growing at 4% per annum. Furthermore post election I expect that an over heating UK economy to slow as it dips back towards 3% over subsequent quarters of 2015.

Meanwhile academics will be busy once more revising their forecasts for 2014 as they ramp up expectations from a range of 2% to 2.5% to now a range of 2.5% to 3.2%, which will still significantly under estimate the actual rate that could even reach as high as 4%, a defacto election boom!

Another thing that 99% of economists and thus journalists that regurgitate their views miss is the prospects for interest rates which will likely end 2014 far higher than anyone (apart from me) can imagine today as most such as Stephanie Flanders remain convinced they will stay put at 0.5%.

"I think its going to be really helpful for the Bank of England if it continues and people are expecting inflation to maybe be under 2% more than above it over the next year or so, that will be a huge benefit to them because the Bank of England does want to keep interest rates low and get more people back to work and crucially get productivity and growth back" - Stephanie Flanders - 15th Jan 2014

19 Aug 2013 - UK House Prices Bull Market Soaring Momentum, 10% Inflation by October?

Interest Rates to Rise Sooner than Anyone Expects?

Therefore forget about 0.5% UK interest rates in 3 years time, far more probable is 4.5% interest rates by the end of NEXT year!

Revisiting Academic Forecasts for 2013

Here is a re-cap of what the academic institutions expectations were for 2013 just prior to the start of the year in order of inaccuracy.

Nov 2012 - OECD 0.9% and 1.6% in 2014.

Nov 2012 - EU : 0.9%

Nov 2012 - Bank of England : 1% - Stephanie Flanders again commented "The Bank hasn't just lowered its growth forecasts for the next year or so - it has more or less given up hope of being pleasantly surprised."

Nov 2012 - British Chambers of Commerce : 1.2%

Nov 2012 - CBI: 1.2%

Nov 2012 - NIESR 1.3%

Actual 1.9%

UK General Election Forecast

The latest GDP data is in line with my expectations for an election boom that looks set to deliver the Conservatives an outright election victory in May 2015 as concluded by my earlier in-depth analysis:

30 Dec 2013 - UK House Prices Forecast 2014 to 2018, Inflation, Trend Trajectory and General Election 2015

In conclusion a May 2015 general election at an average house price inflation rate of 8.5% would result in a Conservative overall majority of at least 30 seats. Therefore this is my minimum expectation as I expect UK house prices to start to average 10% per annum from early 2014 with my actual forecast converging towards average UK house prices breaking to a new all time high just prior to the May 2015 general election which would be a significant boost for housing market sentiment and thus the Conservative's election prospects.

Ensure you remained subscribed to my always free newsletter for housing market updates as well as FREE download access to my new UK Housing Market ebook (available by mid February 2014) which includes the full analysis and many topics beyond the forecast analysis such as -

  • A step by step guide of how to buy a house.
  • Analysis of buying vs renting
  • How to increase the value of your home
  • Managing your mortgage debt
  • Maintenance that can save you a lot of money long-term
  • Money saving low cost home improvements
  • Regional house prices analysis
  • Surveying properties - what to look for

and much more.

Source and Comments: http://www.marketoracle.co.uk/Article44173.html

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2014 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

R.E.B
29 Jan 14, 14:48
Boom and bust

At the end of the day, the bigger debt based boom we have the bigger the bust will be in 2015/2016. We have learned nothing.


Nadeem_Walayat
29 Jan 14, 19:30
Boom No Bust

Hi

The cycle will run for more than a year or so, at least 4 years and even then its too far away to know when the next bust will be, my analysis suggests not for the remainder of this decade.

We may look back on this moment as the start of a great boom that no one saw coming.

Best

NW


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules