Category — economic data

The world’s financial governance structures are in need of a comprehensive overhaul. The G20 ministers met over the weekend, and produced this document, which says, in effect, we’ll try really, really hard to do something, m’kay? You find steaming phrases like this:

We will: Continue our vigorous efforts and take whatever further actions are necessary to stabilize the financial system

The short term todo list is vague, vanilla stuff, sadly, with no real changes mooted other than inclusiveness with developing nations, but that was a given (remember, this used to be the G7. How long before it’s the G168?). The core recommendations are to do whatever we are doing right now, but harder, faster, and, eh, harder. And faster, ’cause, like, this is important, yeah?

Watch for the next G20 meeting at the end of April—will the language have changed? Will the tone be substantially altered? Will there be the sweeping reforms people like Robert Shiller, Paul Krugman, and others have called for? 

Or will we just wait for Obama to save us?

 

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Take a look at the data below, which comes from this recently released CO2 emissions report by the CSO. (You can get the data I used to make the chart here).

I’ve taken the largest emitters of CO2 by sector, and graphed them. The data pull out an interesting story. We see a mitigation of the levels of CO2 being pumped into the air my mining and manufacturing, and an increase in the levels of CO2 being emitted by residential areas. Overall, I have to say, though this picture looks bleak, and Ireland’s environmental record is dismal, to say the least, it could have been worse. The overall trend is upward, sadly, and projected to increase further.

I certainly was expecting increased levels of CO2 over the last 5 years above these numbers. Does anyone have a CO2 emissions data series for Ireland going back, say, to the 1970’s?

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In a previous post I did a little chart showing why this recession is different.

Now we see the same analysis from a different point of view: Oil.

Link

From calculated risk via Delong. 

August saw the release of the National Income and Product Accounts for 2007. A few choice graphs for y’all this morning. First, we’ve got the Gross Domestic Product (GDP) graph from 2002-2007, valued at different prices.

GDP is really the sum of the price, , of final goods and services, , in a given period, times the quantity of those goods and services, , so if there are goods in the economy,

.

GDP is based on prices, which change all time, so the number is chain weighted to take account of those price changes. That’s why you see two bars in the figures below from page xvi of the CSO’s NIE report. 

 

Two things should strike you reading the graph from left to right. First, just look at how rich we are. Think about how this statistic translates into tangible differences in people’s living standards. It’s a remarkable thing, when you consider, say, our European neighbours. Here’s a graph of GDP per capita (dividing total output by the number of people in the economy to take account of different population sizes) for the OECD countries.

What do you see? You see a very rich Irish nation, compared to its peers. We know this, but it’s important to be reminded. 

Next up, we’ve got personal expenditure. Again, notice the increases over time, since the end of the Celtic Tiger period around 2002. 

What is the bottom line? The national income accounts show a robust and wealthy economy, which has some overvalued assets, and is undergoing a revaluation of those assets by 2007. The wealth created in the previous years, however, doesn’t go away—it’s all still there, on our backs, on our roads, over our heads, in our bank accounts. We’ve just decided the economy’s heading for another recession. 

Number to watch: personal expenditure 2007 as compared to 2008. This will tell you what households are spending, how much, and what on. It’ll make for some interesting reading. 

Several news outlets report consumer sentiment in Ireland lifted slightly over the summer months[1, 2], mainly due, they say, to price drops because of the summer sales. Fair enough. What they don’t mention is the impact of an unchanged ECB interest rate on people’s mortgages, a fairly stable economic environment once one controls for rising oil prices (see the chart opposite for more details, just click through), and the implosion of the housing market, and the slashing of prices for goods in many areas of economic life.

(I’ll have another post tomorrow going through the wholesale price index numbers—the price of bread went up 14% this year!.)

None of the newspapers I’ve read download the report itself and take a look at the numbers, relying on copy and paste quotes from Dr Duffy and Mr Hughes from the ESRI website. The numbers, as they usually do, tell a more nuanced story.

Here’s the chart, compiled by Austin Hughes of IIB bank and David Duffy of the ESRI. It’s an index, and it shows, from left to right, a worsening of consumer sentiment over the year to date, followed by a decrease in the decrease, and then a slight uptick from 63 to 69. Click the figure to get the ESRI’s report in full.

 

More interesting is the figure buried in the text about consumers’ expectations about the next 12 months. What does the man in the street think? He thinks it’s going to get better. This measure, again an index, went up from 23 to 26. The dramatic decrease in consumers’ expectations over the year is shown in the figure below:

Again, what could account for the dramatic drop off in expectations, which are just opinions about the future, in the Irish economy? Well first, the slowdown in the housing market, second, rising oil prices, and third, high relative prices for almost every good in Irish commerce at the moment. The government will act to stabilise the housing market in the next budget, and perhaps before that, for political survival. The price of oil is dropping again, but won’t drop back to pre-2006 levels—the supply just is not there. The price of goods in Ireland is something only Irish consumers can effect: stop buying expensive stuff, but buy its cheaper variant. Retailers get the signal through increased inventories that people either want other stuff or cheaper stuff. They drop their prices to get rid of the stuff they have now, in a sale, which is what we saw over the summer. The prices of everyday commodities have to moderate to change people’s perceptions of the future, which is based mainly on how their incomes are coping with their consumption choices, so if people shop around more, and our retailers begin getting the point that lower prices correlates to stronger demand (ala Lidl), then we will be in pretty good shape.

The only person who can make a change like that is the Irish consumer—the government can’t make the spending choices for them.  People will adjust in a year’s time, and as long as the US economy doesn’t physically implode, which no-one wants to see happen, things should stay more or less on course for a return to moderate growth in 2009/2010, as the ESRI predicts in its recent quarterly report. 

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