Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

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

© 2005-2019 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