Thursday, November 8, 2012

The UK's Growth Problems (or, Thank God For the Olympics)

The above chart is from the latest release of UK GDP.  Notice the black line which is total GDP.  It has essentially been flat for the duration of the recovery.  In fact, the only major change that we see of all the various components is a bump in construction in 2010 and 2011.

The above chart highlights the basic problem.  First, note the continual negative reading in production for the last 7 quarters.  Before that, we see growth at very low levels, indicating production is barely growing at all.  Next, note that construction has contracted for the last three quarters -- and at a fairly strong clip.  Finally, services have been just barely growing over the last 8 quarters.