Most economists expect the UK's third-quarter growth to stay at around 1 per cent, but the propensity for the GDP figure to lag the true state of the economy is likely to be emphasised again by a whole series of numbers released on the same day. These include the official statistics for government spending, imports/exports, business investment and private consumption. These are all expected to reflect the truly anaemic state of the economy and here is a summary of what the figures are likely to show in approximate order: 1) The government has no money 2) We are running the biggest current deficit among the major European economies 3) Businesses have record cash balances but aren't investing 4) Consumers are digesting another year of energy and food price rises.
The US is beset with similar issues - and the fiscal cliff still looms large - but figures on Wednesday and Thursday for mortgage approvals, GDP and personal consumption are nevertheless expected to demonstrate that its economy is still in pretty decent shape. Home sales are forecast to pause in the run up to the traditionally quiet Thanksgiving holiday season, but new home sales have been growing by nearly 6 per cent so far this year, with signs that the market has finally worked its way through surplus pre-credit crunch era housing stock. Contrast that with the UK's credit situation as net mortgage lending figures, which expected to show net lending of £500m, have recovered to barely a fifth of average lending in a comparable period in 2007.
Indeed, the bottoming out of US asset prices is having a positive effect on the rest of the economy as the country pulls out of recession. Thursday's GDP figures are expected to show annualised growth topping 2.8 per cent, figures which many European countries can only envy; a series of consumer and business confidence surveys this week in key economies like France and Italy are expected to show how gloomy the general outlook is. As things stand, output is expected to contract this year by -0.5 per cent.
Chris Dillow will return week beginning 26 November 2012.
