GDP is up 2.1 percent (2.2 in raw data uncorrected for number of working days), revised upward from the previous 1.9. Christine Lagarde is ecstatic, because the figure is now above the lower bound of her predicted bracket (2.0-2.5). But not so fast: the actual INSEE figures show that an amount equal to 0.1 pct of GDP went into inventories, not consumption. There are some other "perverse" revelations in the data. Part of the consumption increase went to a spike in automobile sales at the end of last year (+4.4%), as customers snapped up large sedans in advance of the penalty to be imposed under the Environmental Grenelle accord on high-consumption vehicles. And export growth has slowed.
Meanwhile, the figures continue to show an increase in purchasing power (+3.3%). Rents are up 7.2%, however, and food costs are also up (1.3%). Yet discretionary household income is said to be up 5%. Could there be some inconsistency in the numbers?
The public deficit was 2.7%, under the SGP limit of 3, but public debt is 63.9% of GDP, above the limit of 60.
On the whole, not a bad performance given the poor conjuncture. Various commentaries.
Thursday, May 15, 2008
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5 comments:
While these numbers are hardly anything about which to get ecstatic, I don't see anything fishy in them. No one who has spent much time looking at national accounts data for a large number of countries would find a 0.1 percentage point contribution of changes in stocks unusual or disturbing.
As for export growth, given recent exchange-rate movements, this is hardly surprising. There may be other factors at work -- doubtless there are -- but the strong euro on its own will have had a palpable effect.
Nor is there any reason to suspect some serious inconsistencies in the numbers on household consumption. Rents are up sharply but hardly dominate household expenditures overall. Rent plus utilities consumes around one-quarter of household expenditure overall, and the 7.2% you mention will not affect owner-occupiers, who constitute the majority of households. Food price rises were relatively low, and food, beverages and tobacco account for under 20% of the expenditure of the average household. It's therefore not hard to believe that real disposable incomes could have risen by 3.3%.
A small correction: in the previous comment, I should have said that HOUSING plus utilities accounts for around one-quarter of average household expenditures.
texexile,
I take your points, although I believe that owner-occupiers are a minority in France and that rents account for more than 25 percent of the typical family''s budget ... but I don't have figures handy. Still, you're probably right that the numbers add up. The puzzle then is why so many people feel so squeezed, and I suspect that the answer is that at the bottom end of the wage distribution, the rent and food hikes weigh particularly heavily. The fact that the aggregate figures are not dismal is good news, but the good news shouldn't be allowed to mask the real pain at the bottom.
Just quickly:
1. The data on the structure of household consumption are from Eurostat, so should be reliable. I think the exact figure for housing and utilities is about 27%.
2. The owner-occupation rate surprised me, too, but it comes from a Belgian government report (on home ownership in the EU) issued back in 2002. I suspect my surprise (and perhaps yours) stems from spending too much time in Paris, where renting is much more the norm.
3. I suspect you're right about at least one reason why people feel squeezed -- those lower down the wage distribution are hit harder by recent price rises. Also, of course, the subjective experience of inflation is always affected by WHICH prices are rising. If the prices of lots of small consumables that one purchases frequently -- like petrol and food -- are rising, it is easy to miss the fact that the prices of a lot of consumer durables are not and may even be falling. And so on. There are thus myriad reasons why even those who are doing relatively well may feel aggrieved.
The owner-occupier rate in France is 52 percent, as I noted a long time ago in this post:
http://artgoldhammer.blogspot.com/2007/05/mortgage-deduction.html
Thanks for all the information.
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