UK GDP Comes At Huge Miss To Expectations As Weather Is Blamed, "Inflationary Surge" Causing Big Head Scratching

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Tue, 01/25/2011 - 08:27 | 902021 kaiten
kaiten's picture

Stagflation, bitchez!!!

Tue, 01/25/2011 - 10:38 | 902388 BigJim
BigJim's picture

To be fair... I live in the UK, and the place really does shut down after a few millimeters of snow.

Tue, 01/25/2011 - 10:53 | 902440 e1618978
e1618978's picture

Best get used to it - when the gulf stream stops you will have an average -10 C temparature in Janruary.

Tue, 01/25/2011 - 15:41 | 903637 egdeh orez
egdeh orez's picture

Pfft.  WTF?!?!  UK doesn't have a department of truth?  Losers!

Tue, 01/25/2011 - 08:28 | 902026 Ferg .
Ferg .'s picture

You can bet the BOE doves are banging their heads after that reading .  High inflation and growth contraction , the last combination they wanted to see .

Tue, 01/25/2011 - 08:30 | 902031 Alcoholic Nativ...
Alcoholic Native American's picture

Your climate sucks bitches.

Tue, 01/25/2011 - 08:32 | 902036 OMG
OMG's picture

Need more chemtrails

Tue, 01/25/2011 - 08:35 | 902041 Racer
Racer's picture

Growth would have been flattish if it weren't for the weather?

HA, like there would be no inflation if it wasn't for all the things that are soaring in price!

as for "underheating" um, that is cooling, slowing down, not 'underheating'


Tue, 01/25/2011 - 08:45 | 902058 EscapeKey
EscapeKey's picture

The BoE have excused above-target inflation for 18 months in a row by "temporary issues". Seriously. It's one big fat lie after another.

Tue, 01/25/2011 - 10:15 | 902250 SheepDog-One
SheepDog-One's picture

Exactly, this is like the Twilight Zone where we're now supposed to be shocked that 24 months of balls to the wall bailouts of everything and trillions printed monetization has resulted in crappy economic conditions? Was anyone here during Paulsons threats of an economic total collapse and martial law actually believing his plan for 0% monetization and a blank check book an actual solution to anything except continued world bankster theft of the worlds wealth? WTF can you say except WTF??

Yea, Im not confused at all! I said 24 months ago this insanity would lead to total collapse!

Tue, 01/25/2011 - 10:19 | 902305 shortus cynicus
shortus cynicus's picture

Sell it to All Gore - "Global Undercooling".

Tue, 01/25/2011 - 08:36 | 902044 Josephine29
Josephine29's picture

These figures are a concern and came as something of a shock in the UK.However whilst they are worrying I notice that with his usual calm thougtful attitude notayesmanseconomics points this out.

Another potentially ameliorating point is the fact that if we look further back into 2010 we saw “upward surprises” to growth in the second and third quarters. The numbers then were unexpectedly strong being initially reported at 1.2% and 0.8% respectively. I wonder if some of the growth unexpectedly reported then has dropped out of the figures in some way giving us a surprise in the reverse direction.


So he thinks that if you look at the year as a whole there are questions about the numbers for several of the quarters and this poses as much a problem for the Office of National Statistics as it does for the UK economy.For those who blindly follow the numbers he also points out.

I feel compelled to point out that I have often argued that these numbers can be unreliable and we never actually ever know that they are correct.

Tue, 01/25/2011 - 09:08 | 902106 EconSammie
EconSammie's picture

I think that some very valid points are made by the analysis that you quote. Having read the article I see that he also thinks that we should allow for the fact that manufacturing and industrial production has been strong. So as ever the picture is muddy but we should be careful of lurching from euphoria to despair as he points out.

Tue, 01/25/2011 - 08:38 | 902045 Die Weiße Rose
Die Weiße Rose's picture

well, do something....

get Bob Geldorf to do some farm Aid or something..


Tue, 01/25/2011 - 09:32 | 902175 reload
reload's picture

In fact the happiest people I know in the UK are Farmers, they are in the tiny minority of the population who have had a great year. Land values are very strong, and making them feel just as happy as the high prices they are getting for crops. The vast majority of us are looking at our tax bills (payment due 31/1/11) and thinking we are being ridden pretty hard! The divide between `the haves and the have nots` is growing and the marzipan layer (middle class) is taking the brunt of the squeeze. One of the Sunday broadsheets has taken to refering to them/us as `the coping classes`. At a party over the weekend I was talking to an Equity fund strategist, a Mkinsey partner and a very senior bailed out banker. They all think the BOE is doing great, the rest of us can watch our incomes be plundered by taxation and inflation and our savings deflate to dust. I sensed some suprise at my condemnation of UK monetary&fiscal policy and of Central Banking and the fractional reserve world in general. For them it is the gravy train, but none the less suprising that they do not see it as the yoke for the majority of their fellow citizens. Inflation & Taxation = confiscation. 

Tue, 01/25/2011 - 10:42 | 902402 BigJim
BigJim's picture

It's true. I have a number of friends who work in an advisory capacity to the banking industry, and it's clear that very few (if any) of their clients understand the wider ramifications of fractional reserve banking and a debt-based money supply.

Tue, 01/25/2011 - 08:38 | 902046 topcallingtroll
topcallingtroll's picture

This is why sentiment is shifting the usa. The ossified, eurosclerotic socialist paradises are in aggregate more over leveraged in their banking systems also. We will find out in the next ten years if all those people praising socialist europe are correct or not. Incentives to work and produce are important. Misallocations of capital are important.

Tue, 01/25/2011 - 10:17 | 902292 SheepDog-One
SheepDog-One's picture

'Sentiment shifting back to the US', ground zero for all these disasters in the first place? What kind of moron bought into the idea you can ZIRP trillions most of which simply sits in world banksters vaults while the middle class is blown out and it would have any positive effect at all EXCEPT for the bankster overlords? Get real!

Tue, 01/25/2011 - 08:39 | 902047 Mercury
Mercury's picture

Does weather ever get credit for quarterly earnings upside surprises?

Tue, 01/25/2011 - 09:37 | 902189 Sabremesh
Sabremesh's picture

Occasionally, a British summer will enjoy a couple of days of uninterrupted sunshine, at which point sales of ice creams on sticks "go through the roof", adding at least 0.0000001% to GDP. Happy days.

Tue, 01/25/2011 - 08:39 | 902049 gwar5
gwar5's picture

Biflation. Don't ask, don't tell.

Tue, 01/25/2011 - 08:40 | 902051 Cdad
Cdad's picture

What? They don't have a seasonal adjustment for "cold" winters? How quaint.

LOL!  LOLOLOLOL!  Com'mon is awfully early here, and the neighbors are probably starting to wonder about all the laughter coming out of my apartment from the closet where I am hiding under all of my winter coats.  Seriously, man...maybe you could hold off on the chuckles until 9ish?

Tue, 01/25/2011 - 10:20 | 902307 SheepDog-One
SheepDog-One's picture

Cdad it seems this morning we've crossed over into the Twilight Zone, where even the 'intelligent' people are baffled as to why 24 months of totaly insane printing of trillions at 0% in a whackjob idea to paper over the latest mega bubble theft ring has caused 'head scratching economic problems' around the world! 

Tue, 01/25/2011 - 08:42 | 902052 LeBalance
LeBalance's picture

Or rather:

"Gee, Sirrah, I wonder if we can get away with telling them this fat lie once again."

"Exactly how many times can we subdivide their consciousness with even more dissonance creating fibs until their cerebral cortices approximate the computing mass of jello?"

Tue, 01/25/2011 - 08:46 | 902060 nevadan
nevadan's picture

...Prime Minister David Cameron’s government increased sales tax to 20 percent this month, which may damp consumer demand this year.

Ya think?

Tue, 01/25/2011 - 08:53 | 902071 Dismal Scientist
Dismal Scientist's picture

From 17.5% to 20%, and its not applicable to food anyway. This is not the major problem. Lack of employment and a whopping debt burden, plus owning too many US Treasuries is more the issue.

Tue, 01/25/2011 - 08:51 | 902066 ak_khanna
ak_khanna's picture

The population in the developed world are suffering due to the hangover from excessive borrowings from lenders who lent to anyone on the street to maximise their own bonuses.

The problems have been compounded by Outsourcin­­­­­­­­g and Rampant Speculatio­­­­­­­­n allowed in all the exchanges. The problems are hereto stay as till date no one in the political arena has even acknowledg­­­­­­­­ed the problems let alone find solution to them.

The politician­­­­­s around the world are nothing more than auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum amount of money or votes, be it the unions, the banksters, the richest corporatio­­­­­ns or individual­­­­­s. They are in the power seat to extract maximum advantage for themselves in the small time frame they occupy the seat of power.

The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.

Tue, 01/25/2011 - 08:52 | 902067 Racer
Racer's picture

And how about the fact that the people cannot afford the massive price of petrol for their cars (now at record high around 133p a Litre!!!!) and fuel to heat their homes because of the cold weather after yet  more tax rises? Add that the higher costs of food and it is no wonder the people don't spend... they can't afford it

Tue, 01/25/2011 - 10:50 | 902429 BigJim
BigJim's picture

Hey you! Someone has to pay for our Brave Boys fighting to save Democracy! And our noble bureaucrats to help 'create' jobs in politically favoured sectors. And pay for an entire class of workshy scroungers to dine at the taxpayers' expense.

Shut up and get back to work. What are you - some kind of right-wing, anarcho, neo-con, libertarian commie?

Tue, 01/25/2011 - 08:51 | 902068 Dismal Scientist
Dismal Scientist's picture

Yes, the UK economy is the opposite of Goldilocks, its both too hot (inflation) and too cold (growth). Call it stagflation if you wish, but that would imply wage growth and there's none of that going on. So lets go with the ZH meme of biflation (and if any of the pedants on this site who insist on saying stagflation want to complain, you can shove it. You know who you are).

A conservative government is presiding over a severe recession once again. I would suggest what they might do differently this time is open up coal mines, rather than shutting them down, given the price of the commodity.

Tue, 01/25/2011 - 09:09 | 902099 EscapeKey
EscapeKey's picture

The thing with regards to biflation, however, is that during all periods of inflation, some things rise in price, some fall, with a typical emphasis on necessities and luxuries. During hyperinflation, I would expect Porsche 911's to be relatively cheap compared to now, but heaven forbid I would want meat for lunch.

Tue, 01/25/2011 - 09:14 | 902127 Dismal Scientist
Dismal Scientist's picture

For me, there's no chance of hyperinflation unless wages tag along in the general upward surge. I just can't see it happening even at the level to help people keep up with headline inflation running under 5% per annum, let alone the true level which must not be named...

Tue, 01/25/2011 - 09:19 | 902142 EscapeKey
EscapeKey's picture

Hyperinflation = political event. Such as sudden lack of faith in currency, like the realization that the US is monetizing about 100% of the deficit, and will never, EVER, pay back their debt in an honest fashion.

Besides, I've heard deflationistas word the same argument why we'd never see inflation given the current scenario.

Tue, 01/25/2011 - 10:35 | 902376 Beam Me Up Scotty
Beam Me Up Scotty's picture

Exactly.  Hyperinflation isn't really "bad" inflation.  They are 2 different animals.  Hyperinflation is loss of faith in a currency.  Thats already here to some extent---people buy gold and silver because they don't have faith in the US$.

Tue, 01/25/2011 - 11:54 | 902714 MachoMan
MachoMan's picture

It isn't just PMs, it's firearms (durable), farmland, hand tools, you name it.  People are already actively converting their wealth from the ether into something tangible, something real and, I think to a large extent, care not about any paper losses in the transition.  They just want to be left with something, anything post collapse.

Like other aspects of the market, the "market" has already collapsed...  perceptions changed...  paradigms shifted...  it's just that other actors with more control have desired for collapse to occur at a later date, regardless of the ultimate cost.

Tue, 01/25/2011 - 11:36 | 902599 Dismal Scientist
Dismal Scientist's picture

I am well aware what hyperinflation is. For some reason you mentioned it in the context of 911's. My original comment was that we have biflation, not stagflation, since wages are not going up. Whats your point ?

Tue, 01/25/2011 - 11:51 | 902690 EscapeKey
EscapeKey's picture

That the term "biflation" is a red herring. That "Biflation" wouldn't be observable during periods of severe inflation is highly unlikely.

Tue, 01/25/2011 - 11:56 | 902724 MachoMan
MachoMan's picture

Oh, I thought you were gonna say because biflation is impossible given the aggregate money supply cannot expand and contract at the same exact point in time.

Tue, 01/25/2011 - 12:31 | 902912 EscapeKey
EscapeKey's picture

Valid point, but I wasn't really thinking in terms of the austrian definition of inflation...

Tue, 01/25/2011 - 08:52 | 902070 TumblingDice
TumblingDice's picture

Time to work in forecasts into those algos boys.

Now, I'm no expert on the weather, but it seems like a pretty clear h&s on the gbpusd developing.

Tue, 01/25/2011 - 08:59 | 902084 gookempucky
gookempucky's picture

Global REAL GDP needs construction period. The worlds construction industry is one of the biggest industries in the whole world. The contribution of this industry towards the global GDP revolves around one-quarter of the total amount. The world construction industry is also a value production generator and provides work to almost 15-20 percent of the total employed person in the whole world. The extent of this industry has become so vast that the energy, in the form of electricity or fuel, consumed by it hovers around two-fifth of the total energy consumed all over the globe. The resources that are utilized in the world's construction industry is also staggeringly high and itself consumes fifty percent of the total world resources. I include world construction to include Commercial/residential/rebuilds/bridges/hiways/ship building/ironworks/UG infrastructure/water facilities/railways and energy use facilities. My view is that 50% of all GDP numbers are just illusionary scrip and add's no value production, without value production there is no recovery anywhere.

Tue, 01/25/2011 - 10:59 | 902459 BigJim
BigJim's picture

I agree. GDP is a misleading indicator of wealth creation.

Let's say a city gets wiped out by an earthquake. The following construction boom will result in high GDP figures, but everyone (jn aggregate) will be a lot poorer because all that activity went into replacing stuff that had already existed.

Throw in all the jiggery pokery that government statistics bureaus indulge in, and laughable inflation calculations, and GDP figures are dubious measures of how a country is faring.

Tue, 01/25/2011 - 09:08 | 902101 Quintus
Quintus's picture

Here's another piece of good news!

The UK National Statistics Office has now started including the debt taken on by the State as part of the Bank bailouts in the overall National Debt calculations.

Here's the fun bit:

"The unadjusted measure of public sector net debt expressed as a percentage of gross domestic product (GDP), was 154.9 per cent at the end of December 2010 compared with 157.9 per cent at end of December 2009. Net debt was £2322.7 billion at the end of December compared with £2248.4 billion a year earlier."

Get that?  If you count ALL of the debt, and not just the bits you like, debt to GDP has nearly tripled to 154.9% and the Debt itself has jumped from £889 Billion to £2,322.7 Billion.  No problem there at all.  Everything's just fine.

Now, in the interests of fairness and consistency, can we have the Fannie and Freddie debt included in the US national debt calculations?  Yeah right.  

Tue, 01/25/2011 - 09:14 | 902128 doggings
doggings's picture

this is pretty stunning that they have chosen to fess up and do this.

maybe theyre actually realising just how fucked they are and decided it might be better if the people actually understood.

&lol@ the idea of the US govt ever telling the whole truth.


Tue, 01/25/2011 - 09:34 | 902178 EscapeKey
EscapeKey's picture

I'm sure it was just a coincidense this was released on the same day as the GDP miss.

I wonder what other peals they will bury today.

Tue, 01/25/2011 - 09:19 | 902141 Matto
Matto's picture

When money is debt and debt is money the expansion of credit is the only growth factor you need. Forget productive allocation of capital, that stuff is pre-digital.

Tue, 01/25/2011 - 09:21 | 902148 EscapeKey
EscapeKey's picture

Holy beeping shit. Thanks for your post.

Tue, 01/25/2011 - 09:09 | 902110 Oh regional Indian
Oh regional Indian's picture

Now if they had payed attention to Piers Corbyn instead of the MET office, they could actually have planned for it.

Now here is some planning news for the US.

Crazy storms in the North-East/East coming up the rest of this week. Think biblical.

Prepare accordingly?

hey're calling them Thundersnows!


Tue, 01/25/2011 - 09:13 | 902125 Id fight Gandhi
Id fight Gandhi's picture

Amazing they shrug off the data and most of Europe is up.

Gold, pound and oil tanking. Meh. Another up US day?

Tue, 01/25/2011 - 09:18 | 902136 doggings
doggings's picture

gold is creeping up valued in GBP

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