A recent article in the Bank of England’s Quarterly Bulletin, “Using internet search data as economic indicators“, 2011Q2 argues that data on the volume of online searches through Google, etc can be used as indicators of economic activity. A recent example was the correlation between consumer confidence and searches on gold prices, as published in the Economist, “Behind the bald figures“, 27 August 2011.
According to the Financial Times, “Twitter research promises trading success“, 8 May 2011, researchers from Indiana University have designed an algorithm that looks at the correlation between mood statements on Twitter and the Dow Jones Industrial Average. What they discovered surprised everyone on the research team. Instead of a mood of negativity arising from a fall in the markets, researchers found the algorithm could predict a rise or fall in the DJIA with 87% accuracy three to four days beforehand.
The 2007-2009 recession officially ended in June of 2009 (the second quarter). How bad was this recession, and how quickly is the economy recovering? How does this recession and recovery compare to previous cycles? Find the answers in some interactive graphics from the Minneapolis Federal Reserve Bank.
UK GDP increased by just o.2% in the 2nd quarter of 2011. But not all is at it seems. There were a number of special events associated with 2011 Q2 including; the additional April bank holiday; the royal wedding and the after effects of the Japanese tsunami. According to the ONS,
“It is not possible to state precisely what the net overall impact of these special effects might have been. Analysis that we have carried out indicates that Q2’s special events may have had a net downward impact on Q2 2011 GDP of 0.4 in the services sector and 0.1 in the production sector. These estimates are broad brush and illustrative. There can be no certainty as to the impact of the special events and there may be other factors at play. “
Also worthy of note is a recent article from the Centre for Business Research at the University of Cambridge. A paper by Bill Martin, The British Economy: As Good as it Gets?, argues that productivity weakness licensed by workers’ willingness to work for low real wages is symptomatic of an economy suffering deficient demand and excess indebtedness, and is not the result of a sudden loss of entrepreneurial flair. .By contrast, America’s productivity growth soared during the recession as firms sacked workers faster than their output fell. It has remained strong since, as hiring has been more sluggish than growth.
According to the World Bank, more than 215 million people (3% of the world’s population) live outside their countries of birth. Remittances, the money sent home by migrants, are three times the size of official development assistance and they provide an important lifeline for millions of poor households. Remittances to developing countries are estimated to have reached $325 billion in 2010. The overall economic gains from international migration for sending countries, receiving countries, and the migrants themselves are substantial.
Also have a look at these articles published in July 2011:
Federal Reserve lowers its estimates for US economic growth.
In an updated forecast, the Fed now estimates the economy will grow between 2.7% and 2.9% this year. That’s down from the previous estimate of 3.1% to 3.3% estimate made after its last meeting in April.
Federal Reserve Chairman Bernanke said the main causes of the recent slowdown are temporary. The Fed expects the economy to pick up next year after the effects of Japan’s March 11 earthquake and higher gasoline prices diminish.
“Activity is slowing down temporarily, and downside risks have increased again. The global expansion remains unbalanced. Growth in many advanced economies is still weak, considering the depth of the recession. In addition, the mild slowdown observed in the second quarter of 2011 is not reassuring. Growth in most emerging and developing economies continues to be strong. Overall, the global economy expanded at an annualized rate of 4.3 percent in the first quarter, and forecasts for 2011–12 are broadly unchanged, with offsetting changes across various economies. However, greater-than-anticipated weakness in U.S. activity and renewed financial volatility from concerns about the depth of fiscal challenges in the euro area periphery pose greater downside risks. Risks also draw from persistent fiscal and financial sector imbalances in many advanced economies, while signs of overheating are becoming increasingly apparent in many emerging and developing economies. Strong adjustments—credible and balanced fiscal consolidation and financial sector repair and reform in many advanced economies, and prompter macroeconomic policy tightening and demand rebalancing in many emerging and developing economies—are critical for securing growth and job creation over the medium term.”
The IMF’s Economic Counsellor Olivier Blanchard says the global economy, hit by slowdowns in Japan and the United States, is expected to reaccelerate in the second half of the year. Brave words!