What stagnation looks like
Following on from Duncan’s excellent post yesterday, new statistics today from the Office for National Statistics confirm just how drawn-out and grinding stagnation has been so far. These are further statistics from the Measuring National Well-being project – one of the Prime Minister’s pet projects and a relic of the time when he wanted to convince us he was a progressive too.
Today’s report reminds us that one of the four key statistics used to measure the economic aspect of national well-being is Net National Income pre head – not quite the same as GDP per capita, because it measures production that is available for the residents of the country. The latest figures reveal that Net National Income is now 13.2 per cent (one sixth) lower than it was just before the recession, much worse than the 7 per cent fall in GDP per capita.
Other figures from the same project, published earlier this month, show that real households’ disposable income per head has fallen 1.6 per cent since the pre-recession peak in the second quarter of 2008. Real household disposable income is income from wages and salaries, pensions, benefits and other sources after taxation and NI contributions are deducted. Real household actual income is this plus the implied value of public services and this fell by 1.9 per cent in the same period. (In the ten preceding years these figures grew at average annual rates of 2.2 and 2.6 per cent respectively.)
But what I found particularly worrying were charts comparing what has happened since 2008 with previous recessions. The data for real household actual income per head is limited to the 90s and the current recession:
Both series start with the figure for the pre-recession peak set at 100 and then each subsequent quarter as a proportion of that. Compared with the 90s recovery, household incomes are stagnating, though there is a hopeful uptick in the most recent quarters. The chart for Net National Income per head is dire:
The fall is much worse in the current recession and, as the ONS report notes:
In the 1980s, NNI per head had recovered to its pre-recession value three years after the beginning of the recession. The equivalent recovery came earlier in the recession of the 1990s; it took two and a half years …
This time, after more than four years we are still in a worse position than at the Q5 recession trough.
This is stagnation, and it’s a problem that is not going to go away quickly.