Was there a ‘double dip’ recession?

According to official first estimates of GDP 2012, there were two successive quarters of negative GDP growth in 2012 (successive quarterly estimates -0.2%, -0.4, +0.9 and +0.0 ). If accurate these figures would justify the expression ‘double dip recession’. All four quarters add up to an official estimate of 0.0% growth for 2012. The London University team, correcting the bias in official GDP calculations, have come up with a figure of +0.5% for the whole year. They haven’t re-estimated quarterly growth, but if 0.2% of the correction relates to Q1 there was no ‘double dip recession’*.

My feeling is that the London University definition of ‘intangibles’ was bound to have understated the upward correction needed because new types of intangibles get invented all the time like the ‘big data’ discussed in Solving the Productivity Puzzle. This is one reason why I concluded that it’s a mistake to try to redefine GDP to capture all investment, and why I believe that (for what it’s worth) the recession was over by the end of 2009, before the present government came to power. GDP will always remain biased against sustainable economic growth. We need to come up with some un-audited management accounting indicators, as industry did in the 1980s when the inadequacy of financial accounting information for running a business became obvious. Let the credit agencies continue to use debt-to-GDP as an indicator of creditworthiness if they want (there is some evidence that they are less interested in it); we should increasingly regard it as irrelevant to economic growth as it is (for other reasons) to growth in human and environmental welfare.

* note 4 march 2013: Q1 2012 growth official figure has now been revised up to -0.1% so it is even less likely there was a double dip recession
** further note 27 June 2013: it has been officially announced that there was no double dip recession in 2012. You heard it here first on 12 February!

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