Does not compute!

Today's news that the UK emerged from recession in Q4/2009 is welcome, but the feeble 0.1% growth rate is a surprise. Consensus expectations were for growth around 0.4%, so predictably the "analysis" in the media has been focused more on the failings of forecasters than on the growth number itself. For example, the Guardian ran a particularly witless piece of gloating called "How economists got it wrong". There was a picture of the one economist who got it right (though she changed her forecast just before the number came out, half-breaking one of the main rules of forecasting: forecast early and forecast often); and there was a roll call of shame for those who got it wrong. Nothing at all, of course, about HOW they got it wrong, even though that was the title of the piece.

If I'd been forecasting, I'd have been wrong too, and I'm almost convinced that when the revisions to this early estimate appear in a few weeks time, the growth rate will be revised higher. There are not many cast-iron rules for forceasting, but one that comes close is that employment is a lagging indicator of economic activity. Employment numbers have been looking stronger for a few months now, and the most recent data showed the first fall in joblessness since the recession began. It's almost impossible that this could have happened with the economy barely expanding, so I think the Q4 GDP estimate is too low -- and wouldn't be at all surprised if revisions eventually show that the recession ended in Q3.

But of course, I could be wrong.