Economists love to crunch the numbers and try to tell us how the world’s economy is faring, but what they rarely do is predict how things will look in one month’s time.
But here’s one way of thinking about the economy, one chart at a time.
Using data from the World Bank, and British Gas’ data on British Gas customers (including how much energy each comes out of) a graph uses a measure called ‘the Implied Future Output’ to chart the trajectory of GDP over the course of a month.
Using the same approach, chart out how it’s done in relation to the first-quarter GDP figure.
On the chart, the dark red bars mark the lows during the quarter. We can see the first monthly dip in April – something economists always point out when analysing quarter-to-quarter growth figures.
The data shows that growth isn’t firing on all cylinders, that investment isn’t strong enough – and that consumers are still spending less.
As the chart shows, the unexpected 0.1% dip in the first quarter is still much too low, and growth has had to be revised down from 1.3% to 1.2%. But that still puts growth in the third quarter ahead of where it was at the same time last year.
Putting the third quarter into context with the previous quarter’s print shows how weak the figure was. Growth has still been much weaker this year than last – but compared to the first quarter the shift is quite telling.
Get it? Britain was on the verge of recession earlier this year, and investment wasn’t strong enough to grow anything at all.
But by the middle of May, GDP had recovered, and a path back to faster growth was being charted.
“The period since July has been the best four-month period since the start of the financial crisis,” said Marco Viallesi, senior economist at Prime Mortgage Group.
“The underlying monthly data for the UK economy is now very positive. The underlying strength of the UK’s economy is accelerating.”
The GDP figures from the last quarter show an economy which isn’t as fast-growing as it was. But as the chart shows, it’s a better performance than it was when we went into recession earlier this year.