Worrying trends for the UK economy
The British economy is recovering with an eye-catching improvement in GDP growth. But the fine print in the forecasts from the Office for Budget Responsibility (OBR) point to worrying trends in what's driving that growth.
Firstly, it is welcome five years from the banking crisis to see forecasts that GDP will grow at more than 2% -a figure that hasn't been seen since before the crash. In 2014, the OBR expects growth to be 2.4% instead of 1.8% as they originally forecast in March. For this year, the growth rate forecast has more than doubled from 0.6% to 1.4%.
The OBR says the main reason for the upward revisions is stronger consumption growth and residential investment. But worryingly, the OBR says that private consumption has largely come from households saving less rather than income growth. This means that people aren't spending because they have more income, but because they are cutting into their savings. This may be due to necessities such as energy becoming more expensive.
As the OBR points out, "productivity-driven growth in real earnings is necessary to sustain the recovery and raise living standards".
In other words, the record amount of private debt, which has just reached £1.43 trillion, points to how borrowing has fuelled consumption. As we saw from the crash five years ago when debt was lower than now, debt-fuelled consumption isn't a sustainable or reliable source of growth.
What’s driving up household energy prices?
I have written before about the rapid rise in the price of energy: gas, up 21%; electricity, up 25%; road fuels, up 29%. They have accounted for the majority of the rise in the UK's consumer prices of 14% in the past four years.
The Office for National Statistics estimates that the share of household income going on "essentials" is up from 28% in 2003 to 36% now.
Salad trafficking rings and the business of food
We all enjoy a good meal out so it's no wonder that food is big business. But, rising food prices are again becoming a big concern.
Internationally, the food business generates more than $4 trillion, or nearly 5%, of global gross domestic product (GDP) each year.
Krugman v Stiglitz on what’s holding back the recovery
Two of the leading economists in the world disagree over whether inequality hampers the economic recovery.
It relates primarily to the US where the top 1% has captured 95% of the income gained since the financial crisis. Since 2009, the top 1% of incomes grew by 31.4% while the bottom 99% saw their incomes rise by only 0.4%, according to a study from the University of California at Berkeley.
China's mysterious Third Plenum
China's mysterious Third Plenum has ended much as it started:
With a brief word from the official Chinese media that the meeting had begun and now a short communique announcing its conclusion.
China's Singles Day
China's Singles Day is a modern twist on Valentine's Day with lucrative results for China's biggest e-commerce companies. Sales online in China have exceeded the two biggest shopping days in the US combined. Black Friday and Cyber Monday are dwarfed by the estimated $5bn from one single day of shopping in China.
Today, 11 November, is China's Singles Day. For the millions of singletons out there, it's an excuse to splurge on yourself… online.
Taking stock: Cars and the recovery
Looking over the earnings and sales data of various car firms reminded me of what cars reveal about our pocketbooks.
It's always hard to tell if there is a turn in the business cycle or whether there is a bubble in the market, but the car industry could provide a steer as to why some stocks have risen and where the economy may be headed.
Will China's Third Plenum be an economic turning point?
Will 2013 be another 1978 or at least another 1993 for China?
Those were the two significant overhauls of economic policy which occurred during previous Third Plenums.
RBI Governor Rajan: India isn't in danger of crisis
The new governor of the Reserve Bank of India, Raghuram Rajan, told the BBC in his first international interview that India has enough foreign-exchange reserves to safeguard against a repeat of the 1991 balance of payments crisis.
Mr Rajan said that India has enough money to pay for all of its short-term debts tomorrow if it needed to, as it has reserves that are equal to 15% of GDP. This is a key difference from two decades ago when the country was rescued by the IMF.
The limits of star power
Can a central bank governor prevent a crisis? The answer will matter not just to India and other emerging economies facing the looming end of the era of cheap money, but to all countries that have gone through a banking crisis and those worried about the impact of a crisis in an inter-connected world economy.
Expectations are high for India's new central bank governor, Raghuram Rajan, who has increased confidence so far, but it's a tough time for Asia's third largest economy.