Notes on the Front

RTE’s David Murphy described the Quarterly National Account numbers as ‘really good’.  Professor John Fitzgerald said the numbers showed a ‘reasonably robust recovery’.   We are told the actual numbers  aren’t all that important– the ones that show economic growth actually declining in 2013, the ones that show that the decline in the final three months of last year was the worst quarterly performance since 2008.  Don’t mind any of that downer stuff.  Like the following chart.  

Domestic demand comprises consumer spending, investment and government spending on public services (excluding exports and imports).  This makes up 75 percent of GDP.  It is one of the better indicators of the domestic economy, but by no means the only one.   Another great advantage is that it is not as sensitive to multi-national accounting activities as other indicators.

So what does the above chart show? 

A flat-line for the last three years. 

Stagnation.  

Six years of a domestic demand recession.   

It goes up a bit and a down a bit (slightly more down), but never strays too far from the flat-line.  Domestic demand fell in three out of the last four quarters.  Since the Government took office, it has fallen seven out of eleven quarters.   In the final three months of last year, the fall in domestic demand was the most severe since 2011.  ‘Really good’?  ‘Robust’?

Some commentators pointed to rising GNP.   The problem with using GNP is that it is determined by international flows; if a company keeps profit here, GNP goes up; if they export it, GNP goes down.  Whichever the company does has little impact on the domestic economy.  So GNP went up last year – but it was not based on rising domestic activity.

RTE news last night, as part of its coverage of the CSO economic numbers, featured a successful café.  The owner claimed that patrons have started spending a little bit more – which I’m sure is true (the business opened its third outlet).  This anecdote was used to portray the entire economy as starting to grow through higher consumer spending.

But the CSO reported that consumer spending fell last year.  It fell faster than the year before – 2012.  It fell three times more than the year before.  Nothing on that in the RTE report – that would cut across the constructed narrative of an improving economy.

Sigh.

Have a good St. Patrick’s weekend.  Have a better one than the economy is having.