Jim Armitage: Take our economies off their stimulants and they aren't really growing at all
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Friday 26 July 2013
Outlook: We are right to take some cheer from the latest run of official statistics. The evidence is mounting that our economy is, albeit very slowly, moving in the right direction.
It's not just our GDP, either – European growth this week has been shown, by the statisticians at least, to be on an upwards path.
But while government beancounters offer a good indication of the direction of travel of the economy, we should never view their pronouncements in isolation from the experiences of companies at the coalface, selling goods to real people. And they paint a far bleaker picture of the consumer side of the global economy than the Office for National Statistics and its international peers.
Coca-Cola, L'Oréal and, yesterday, Unilever and Colgate have all reported falling, flat or, at best, minuscule growth in turnover in the UK and Europe over the past quarter. Colgate's fell 3 per cent. Unilever's 1.2 per cent, and Coke's 4 per cent (by volume). L'Oréal, possibly because it's worth it, was feted as a star performer despite growth of only 0.8 per cent.
Unilever's chief executive, Paul Polman, stressed to the City yesterday that global economies are in for a long, hard slog of zero, negative or low growth. Even emerging markets sales expansion – slightly down to 10.4 per cent for the quarter at Unilever – was likely to slide further.
Meanwhile, in the US, where the official data seems better on jobs and output, consumer spending is patchy at best. There is growth in wealthy pockets like Manhattan, Mr Polman says, but travel a few miles and you see sales still contracting.
In short, no matter what the official data tells you, the developed world is still deep in crisis.
In the UK, yesterday's figures showing 0.6 per cent growth in GDP for the last quarter are terribly weak. As my colleague Ben Chu points out elsewhere in the paper, the economy is still 3.3 per cent smaller than it was in early 2008. In normal times, based on averages going back to the Second World War, we would expect to have seen it expand by 15 per cent since then. And this, as Mr Polman was reminding investors today, is with the US Federal Reserve artificially keeping demand alive with quantitative easing. Take the Western economies off the angel dust of money printing and super-low interest rates, and the current "recovery" would disappear in a flash.
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