According to the British Retail Consortium, non-food retail prices actually fell last month driven by discounting.
So, we are seeing the very real impact of the squeeze on household financing driven by BoE policy.
While food prices seem unlikely to drop for climate & supply reasons, across non-food markets its the potential start of a period of deflation... an 'overshoot' by the BoE that will be hidden in 'headline' inflation but will still be a serious economic problem.
This is literal doom, but I actually find it mildly encouraging that our security and government services are being told the truth about the current state of the nation, society, and world. This is the kind of report that every single politician needs to not only read but reallyunderstand.
Quotes below:
"The situation will probably deteriorate further in the next five years, as the early effects of climate change and a global recession add their weight to the ongoing crises"
"accelerate the decline in living standards that the younger generations have already witnessed compared to earlier generations"
"the difference between the extremes of wealth is greater now in developed countries than it has been at any time in several generations"
"Law enforcement should expect continuing social and political polarization fueled by misinformation campaigns and an increasing mistrust for all democratic institutions"
"Access to [big data] will allow private entities to develop the means to exercise undue influence over individuals and populations at an unprecedented level"
"In the wake of COVID-19, Canada's governments have normalized operating during a respiratory pandemic... the damage to the economy and to the social fabric of the nation is ongoing"
Here's the BBC Verify team's take on Rachel Reeves assertion that this is the worst economic inheritance faced by an incoming govt. sine WW2.
The (downbeat) conclusion is that things are bad but not historically unprecedented....
Oh that's a relief.....
But perhaps the point the BBC team quietly ignore is how much of the situation we find ourselves in right now was self-inflicted, rather than part of a wider global context....
Lives vs. Livelihoods: The Impact of the Great Recession on Mortality and Welfare
... We leverage spatial variation in the severity of the Great #Recession across the United States to examine impact on mortality and explore implications for the health consequences of recessions... an increase in the #unemployment rate ... reduces average, annual age-adjusted mortality rate by 2.3 percent, with effects persisting for at least 10 years...
Taking my preferred measure for #economic activity/growth, the UK has been in #recession for over a year... no wonder people are less optimistic about the UK economy than #RishiuSunak & #JeremyHunt keep telling us we should be.
$350B in pandemic savings was supposed to give the economy a huge boost. It still hasn't happened
Savings stockpile won't help avoid a recession or help many Canadians squeezed by inflation
The majority of the savings now belongs to higher-income Canadians, while lower- and middle-class households have used up their pandemic savings or are making withdrawals because experts say they likely need it to keep up with inflation.
En Argentine, l’effet Milei, c’est d’abord la hausse de la pauvreté
Le niveau de pauvreté en #Argentine serait revenu en deux mois à un niveau jamais vu depuis vingt ans. La contre-révolution libertarienne du président #JavierMilei a aggravé la #récession dans laquelle le pays était déjà englué depuis l’été dernier.
It used to be said that when the US sneezes the rest of the world catches a cold (as a way of explaining the impact of its economy on global markets)....
So as #China slips into a likely deflationary period (potentially slowing its #economic growth further), are we now seeing what happens when the pivot east, opens up the global economy to the impact of a Chinese #recession?
For those interested in such things, this week brings the latest #GDP figures and the confirmation for otherwise that we have reached a proper technical #recession... which you'll recall will be welcome to the Bank of England that in its fight against #inflation has decided a recession is the sort of pain we need to squeeze out demands for more pay by those pesky #workers.
Of course if we are in a recession & profits are being maintained, we all know whose really hurting... & its not the MPC!
If you want to know what a Sado-Monetarist looks like, here's Catherine Mann who is currently arguing that the BoE should put up (!!) #interestrates to 5.5% because the UK has failed to fully squeeze #inflation out of the economy....
I think what she actually means is the BoE has failed to conclusively plunge the UK into #recession & must try harder... because as we know 'if its not hurting, its not working', and clear Mann thinks we're not hurt enough yet!
Deutsch Bank have had a go at answering the Q.: how long does it take #interestrates changes to feed through in to the economy'?
There answer is not the months that most #economists seem to base discussion on but rather (as the chart suggests) show a cumulative impact that takes around four years to fully take effect.
If so, the impact of the BoE's current policy will still be negatively impacting the economy in 2026/7;
The British Retail Consortium's quick data on January #retail sales confirms that as sales growth (of 1.2%) continues to lag #inflation (4%) we continue to see a squeeze/decline on sales volumes;
as this indicates, the #costofloivingcrisis (or as I prefer the crisis of #enforcedpoverty) is still driving down actual spending power for individuals.
We are still buying less, although spending more on what we do buy.
For consumers, this is what #recession looks like, whatever the formal GDP data
Martin Sandbu concludes, after exploring how #inflation has been about supply-side shocks, that:
'we don’t understand how monetary policy works in today’s economy. At least we should hope we don’t, for if it does turn out to work like we used to think it does, we should soon see things get a lot worse as higher rates finally start biting and throwing people out of jobs'!
If #CentralBanks are right then they'll have deliberately engineered a #recession; if they're wrong the pain was pointless
#Australia is unlikely to fall into #recession in 2024 but for most families it will feel like one, according to a leading economist who’s predicting years of financial pain for households. #auseconomy
Germany entered a recession last year because the average worker needed 20 sick days.
Pitting public health against economic health is fundamentally wrong and will lead to the utter destruction of both.
#Stocks are surging, unemployment is near historic lows and the nation appears to have avoided a predicted #recession. Yet Trump claimed on Monday that the economy is “fragile” and running on “fumes” as he warned of a crash.
“And when there’s a crash, I hope it’s gonna be during this next 12 months,
Former House Speaker #Pelosi (D-Calif.) called Trump "grotesque" for his comments.
Anyone who is worrying whether or not we are in (or will be in) a #recession this year & into 2024 is missing the larger picture....
#economic activity in the UK has largely stagnated, with the data oscillating around figures of less than 1% GDP growth.
leaving aside issues of the utility of GDP as a measure & if growth is what we need (often discussed in my timeline), the key thing is the UK's economy is in a parlous state after over a decade of government by the rentier class.
Oh, I see the #ONS has revised down its estimate for GDP growth in Q2, so alongside the decline in Q3, we are now in a technical #recession.... which is exactly what's the BoE want, so perhaps will now reduce #interestrates, now that the recession has started.... and given the lag of effect of interest rates changes we can expect 2024 to be mostly recession - which will serve those pesky #workers right for asking for pay rises!
Given that changes in #interestrates policy take around 12 months to work their way through the system, and that the BoE seems keen to force a #recession and/or #deflation to 'discipline' #workers trying to bring their real wages back to level now not seen for over a decade... the Q. is:
How long is the recession they are engineering going to last?
You'll be able to tell by when they start to change policy; if they wait until the recession has actually started then they want it to last a year
When #CentralBanks use #interestrates as their only 'weapon' against #inflation the delay of effect can be between 12-18 months... so we are currently impacted by the BoE policy of around a year ago, while today's interest rates will feed through the economic environment at the end of 2024.
So the danger is (always) the interest rates policy may 'overshoot': on the way up leaving inflation running too high, but also on the way down running the risk of #recession...
With the prospect (already) of a pre-Christmas slow down in consumption (and potential #recession in the new year), #manufacturers are now facing a #supplychain crisis....
not only is the #SuezCanal already at risk due to attacks on shipping approaching the canal ('encouraging' some shippers to take longer, more expensive & slower routes), now the #panamacanal has been hit be a drought that is severely constraining its capacity.
There's going to be a lot more friction in global supply chains