Still easily the slowest recovery of GDP per head on record
In the coverage of the GDP figures last week, some attention was paid to the ONS observation that on a per head basis GDP in 2015 Q2 is likely to be back to the pre-crisis level. This may be all well and good, but is hardly a measure of economic performance.
The relevant measure is instead the pace of expansion (i.e. growth) of GDP per head, and on this basis the present recovery is still the slowest on records that extend back to the middle of the nineteenth century.
Indices of GDP per head over economic recoveries from the 1830s to today
[The analysis is based on annual figures. For the current recovery, because the latest GDP per head data extend only to the middle of the year, annual totals over Q3 to Q2 are used, so that for example the final figure on the chart is the sum of quarterly figures over 2014Q3 to 2015Q2. On this basis the low point of the most recent recession is 2009Q3-2010Q2.]
The shortfall between the latest recovery and all others is marginally reduced relative to the previous version of this analysis (here), with growth over the five years of 6% rather than 5%. But as before this is still around only half the pace of all but one (1886-1891) of the worse of the other recoveries. Strikingly the recovery from the great depression (1932-1937) was three times faster than the current expansion. After the initial failure of spending cuts at the start of the decade, over the 1930s policy had turned to expansion on both the monetary and fiscal fronts.
Jonathan Owen at the Independent on Sunday reports our analysis, citing Frances O’Grady, TUC General Secretary:
We are stuck in a culture of low expectations for the economy. And while it suits the Chancellor to get an easy ride for his shoddy record, it’s not good for the rest of us. Six years on from the recession, our economy should be doing much better by now. It has never taken us so long to recover from a major recession before.
We can’t continue with an economy becoming even more unbalanced than it was before the recession. We need a new plan for productivity and growth, because the current one is failing to deliver across the whole economy. We need more investment in infrastructure, innovation and skills, instead of rushing into another round of severe cuts that will damage public services and put growth at risk.
He also contacted academic economists, e.g. Oxford University’s Professor Simon Wren-Lewis :
Anyone who continues to describe what is happening in the UK as a ‘strong recovery’ either has not bothered to look at the data, or is being deliberately deceptive.