GDP exaggerates recession says Ward

Henderson New Star chief economist Simon Ward says patterns in previous recessions suggest the depth of the current downturn may have been overstated.

According to Ward, revisions made to slumps in 1974-5, 1979-81 and 1990-91 based on later changes to some labour market indicators show the declines were not as bad as originally thought, adding the same may apply to the current downturn. Ward says while UK GDP is estimated to have fallen by 5.7% between Q1 2008 and Q2 this year, a later revision may show it actually fell closer to 4%. "A comparison with the last three recessions suggests [the current estimate] will be revised to show a significantly smaller decline over coming years," says Ward. "This claim is supported by labour ...