Markets in turmoil as UK GDP goes negative.

[girl gone mad]

-.5% on expectations of +.5%. Austerity doesn't work and the neo-libs can take comfort in an unblemished record of failure. SSDD.

http://www.telegraph.co.uk/finance/economics/8280459/UK-economy-suffers-shock-contraction.html

Gross domestic product fell 0.5pc in the fourth quarter, the most in more than a year, the Office for National Statistics reported on Tuesday. The decline compared with growth of 0.7pc in the third quarter.

The news sent the pound sliding and pushed shares lower in London, reigniting fears of a double dip recession as the Coalition begins its austerity drive.

"This is a horrendous figure. An absolute disaster for the economy," said Hetal Mehta, an economist at Daiwa Capital Markets Europe.

"We knew that retail sales were heavily affected and that services output would be weak, but the collapse in construction was a major contributor the downside surprise."

Construction slumped 3.3pc compared with the third quarter, while services shrank 0.5pc

[DCBob]

1. bad weather effects

Almost entire month of December was horrendous.

[girl gone mad]

2. lol.

[DCBob]

3. lolololololol.

[girl gone mad]

5. ..

[Statistical]

6. The numbers are seasonally adjusted.

Name a December in last 30 years that didn't suck in the UK.

Still even if you take a generous 0.5% of GDP coming from "bad weather" which former Central UK Bank member (on CNBC this morning) said is crap that means GDP is likely however around 0%.

0% GDP and 4% inflation is stagflation.

What is even worse is the US reports ANNUALIZED numbers. So when we say 3% GDP growth we mean the qtr actually grew 0.75% and if it did that for a year it would be 3%.

UK reports simple qtr growth. So -0.5% GDP in UK is comparable to -2.0% GDP here. An off the charts bad number.

[DCBob]

8. It was the coldest December in over 100 years plus there were massive snow falls.

Construction was brought to near complete halt. I think that would have some effect on GDP.

[Statistical]

9. Some. Sure. But 0.5% is 2% annualized which is a giant negative number.

When you consider the consensus was 0.4% positive (1.6% annualized) we are talking a delta of like 3.6% on anualized basis.

That is beyond any snow storm. US is likely going to report Q4-GDP of 3.5% annualized it would be like instead of 3.5% the US report -0.1% annualized.

[DCBob]

10. Ok. but lets see what the next quarter brings..

If another negative then they are in trouble.

[Statistical]

11. If it is flat and they still have >4% inflation they also are in trouble.

Stagflation is rough to escape from.

[DCBob]

12. Agreed.

[Hawkowl]

15. So you are pro-austerity?

You are saying that if the UK had a balmy winter, then the austerity measures would've pushed their GDP into the black? No? Then what the hell is your point?

[girl gone mad]

4. WELCOME TO STAGFLATION: UK Economy Shrinks While Inflation Set To Rise 4%

WELCOME TO STAGFLATION: UK Economy Shrinks While Inflation Set To Rise 4%

The UK economy seems to be quietly slipping back into recession. UK economy contracted 0.5% in the fourth quarter compared to the consensus of 0.5% growth. The previous quarter growth has also been revised down from 0.8% to 0.7%. On an year-on-year basis, GDP grew 1.7%. Looking at the release, most components of the economy is shrinking. Very ugly number indeed, but of course, they can blame the weather.

The situation in the United Kingdom seems to be very tricky. David Cameron and his coalition government has been determined to cut deficit, which will certainly hit the economy. The value-added tax (VAT) hike is not helping the situation as the Great Britain is having a stubbornly high inflation, now at 3.7%. With the VAT rise in-place, inflation is set to rise to 4% or more this month.

Read more: http://www.businessinsider.com/uk-stagflation-2011-1#ixzz1C3Fkkyow

[Statistical]

7. Hey teabaggers are you paying attention.

This is what cutting spending and raising taxes in an early recovery gets you.

The land of no good options.

So GDP growth is at best flat, and inflation is 4%. What should central bank do:
a) lower rates and face HIGHER inflation
b) raise rate and plunge economy into a double dip recession.

This is why austerity in an early recovery is stupidity.

[stevebreeze]

13. austerity = cutting jobs from the government

why would anyone think that putting more people out of work would help the economy?

[upi402]

14. because the TV machine says so?

Even so-called Democrats deride anyone talking about undoing failed trade and tax policies.

[Hawkowl]

16. It is like a robbery

The super rich engineered a financial collapse and collected a gigantic, unprecedented windfall of bailouts and bonuses. Now, they must have "austerity", i.e; "Don't tax my ill gotten gains!". Like Marie Antoinette said, "let them eat shit".

The fundamental problem in the US is that everyone identifies with the super rich, instead of the working class slobs they are. So everyone thinks the rich shouldn't be taxed too much (meaning no more than a 7-11 clerk) because everyone works hard and deserves to keep the millions they stole. I mean, hundreds they earned.

Idiots. America is filled, filled to bursting with greedy, avaricious, morons who will fuck their own mothers over for an extra nickel.