7IM Short Thoughts: Beware, moveable feast!
GDP figures aren't set in stone.
The desire for immediate data often means the quality of that data is compromised. In the latest Short Thoughts, Chris Justham explains why estimates aren’t always helpful and headlines around Office for National Statistics’ should be taken with a pinch of salt.
So around this time, every single month, we pour over data from the Office of National Statistics, and that tells us whether or not, in this case the UK economy, is in growth or contraction mode. So GDP really key metric for obvious reasons.
But when that monthly data comes out, it's got a very important caveat at the beginning. And that caveat is that this is just an estimate. And the reason that it's just an estimate is that it takes the Office of National Statistics about 40 days at the end of every single month in order to collate their data. To research how many sandwiches have been bought, coffees consumed, shopping trips have been had, haircuts done, now you get the general picture. That is a tough job.
So is it any wonder, then, that these statistics when they're released, are often revised? So for example, in February 2018, it was estimated that the economy in the UK grew by 0.4%. It was later revised and get this, to have contracted by 0.2%. Imagine the difference in headlines? Imagine the framing when this is then put out there for people to consume?
And imagine now, when we're talking about the difference between a recession or an economy that's in growth, that is a very, very big swing. So, when you get these data points and when you consume them at the end of every month, treat them with caution because they are just estimates and spare a thought for the people at the office national statistics, that is a tough job indeed.