BBC News


Page last updated at 11:33 GMT, Friday, 18 July 2008 12:33 UK

Five reasons to be cheerful amid the gloom

Feel the gloom. With more bad news on the economy this week, is there no comfort, no end to pessimism? Yes! The Magazine challenged statistical sleuths Michael Blastland and Andrew Dilnot to scour the data - and find us five reasons to be cheerful.

Newspaper headlines

"They're out of sorts in Sunderland
And terribly cross in Kent,
They're dull in Hull
And the Isle of Mull
Is seething with discontent,

They're nervous in Northumberland
And Devon is down the drain,
They're filled with wrath
On the firth of Forth
And sullen on Salisbury Plain."

Noel Coward sang of bad times just around the corner. According to the headlines, they've arrived.

"With a scowl and a frown
We'll keep our peckers down,
And prepare for depression and doom and dread."

It's no joke if you work, or used to, in the building trade, if your food bill has ratcheted up or your house depreciated. For 10 years, word had it that our economy was on a path of roses. That path now seems strewn with cut-up credit cards.

Caught between the evils of the credit crunch and the oil price - prompting falling confidence and rising inflation - the authorities seem stuck. They watch, and wait, and hope... while Gordon Brown chews his nails.

But what does the data show? Though some people unquestionably face a rough time, has the gloom been overdone? If you are a house buyer not a house owner, for example, falling prices are good news. Dig into the statistics - if you believe the statistics - and you might even wonder if there's a media conspiracy to depress us by avoiding anything positive.

So, with a favourable reading of the recent data, here's our pick of what might have been.

Regional house prices

Believe it or not, they're still going up in places and still higher than a year ago almost everywhere. It was roundly ignored last week in favour of more gloomy surveys but, according to the house price index compiled by the Department of Communities and Local Government, using data on all completed sales (and so more comprehensive than the partial surveys by the Halifax and Nationwide), in most areas house prices are still up on a year ago. Only in Northern Ireland do they show a fall. In London, the annual rate of house price rises actually went up - from 7.5% in April to 7.8% in May.

Employment rate (Source: National Statistics)

Despite the evident woes of the building trade, more of those who want jobs have had them in the first half of this year than at any time since Harold Wilson was prime minister. Incredible, but true. The employment rate for the working-age population is about 75%, the highest rate in our recent history - and one of the highest in the OECD. Unemployment has taken a so-far small turn in the wrong direction only in the very latest figures (and will probably continue that way) but, on a longer perspective, it's not since Tom Baker was Dr Who that jobs were as plentiful as for most of 2008.

Retail Price Index
The Retail Price Index - the old way of measuring prices before the government changed things to produce a lower rate, known as the Consumer Price Index - has actually fallen from where it was just over a year ago.

And since the RPI, unlike the CPI, takes account of mortgage interest payments and the level of house prices, there will be downward pressure on this index as last year's interest rate increases drop out of the calculation and we see the effect of slowing house price inflation. This will help counteract rising energy and food costs. Although these are going up fast, clothing and footwear costs have been plummeting with heavy discounting. Alcohol has also been falling in price. So even if you're still unimpressed, at least drinking away your sorrows has seldom been cheaper.

Mervyn King
Bestruck by gloom? No, Mervyn King's just shading his eyes from the sun at Wimbledon
Swallow hard (see 3 above), but squeezed incomes are good - for now. How come? The rising oil price has made us poorer. The Bank of England Governor Mervyn King's big fear is that we will all try to compensate with higher pay, and this will feed into even higher prices and an inflationary spiral, forcing him to raise interest rates.

So data this week showing that income growth is down a smidgen - from 3.9% a year in April to 3.8% in May - will have Mervyn sighing with relief. Yes, it means we all face a lower standard of living as prices outstrip earnings. But if we bite that bullet rather than trying to match inflation, inflation will soon plummet and recovery will be quicker. If we try to avoid the pain, the Governor will feel no choice but to make us pay, perhaps more heavily in the end. A little medicine now, or a lot later? That's right, even bad news on pay could be good news really.

Feeling better? No? Then finally, if the economy still depresses you, try this: living longer, working longer, and staying healthy longer all go hand in hand according to data this week from massive and continuing research known as ELSA (The English Longitudinal Study of Ageing). And more of us are doing all three. The study confirms previous evidence from National Statistics that we are, men in particular, putting on extra lifespan faster than ever before, becoming more prosperous in older age than previous generations, and staying healthy with it.

Though you have to ask, if life is as miserable as they say, who wants more?

As Noel Coward put it:

"We're going to unpack our troubles from our old kit bag
And wait until we drop down dead."

Alas, now even that takes longer.

Michael Blastland and Andrew Dilnot are authors of The Tiger that Isn't - Seeing Through a World of Numbers, published by Profile Books.

Below is a selection of your comments.

At last, someone who doesn't blindly just believe the hype - I've been trying to convince people for months that things aren't as bad as they're being made out. Remembering the early 90s - things were way worse than they are now, it's just after such a long period of unrestrained positivity, even a slight drop shocks people and makes them feel bad - unfortunately, this can have a self fulfilling prophecy effect - we expect it get bad so it will. Come on everyone - cheer up - at least the weather's getting warmer!
RG, London, UK

Who are you trying to con. like i keep saying statistics being manipulated again. LIES i say its all LIES
Nova, Telford

Good article and the media should propagate these sort of sentiments instead of promoting doom and gloom. I have to say it's hard to believe that so far none have spotted the trends!
Guru, Halifax, UK

At last some common sense. There is far too much scaremongering in the media which only serve to compound the problems further.
Janice Cartwright, Oxford, England

At last - media people NOT talking us into recession. Ever since the Northern Rock debacle and the "Credit Crunch" media "experts" have been commenting on the forthcoming recession. All it takes is a couple of SENSIBLE analysts to interpret the figures to dispel the nonsense of recession. More should do the same!!
Bob Allen, Ipswich

How on earth can it be a good thing that house prices are actually up year on year? The reason we are in all this trouble is because of house price rises and greedy people cashing in on it to the detriment of ordinary people who just want to get a plain old family home for the long term.
Alex, Bristol, UK

It is like a breath of fresh air to hear some one being positive for a change! I totally agree with this story too! There is far too much doom and gloom out there about this crunch, and not enough people looking for the brighter side of things! I haven't really noticed much difference apart from the news mentioning it every 5 seconds!!!
Annette Foy, Plymouth, Devon

Answers to your comments:

1. House prices are not going up they are being held high by estate agents asking silly prices. All the houses i know that are on sale have been so since the march.
2. Unemployment is high they are just hidden as incapacity.
3. For the time being its steady a 5% my pay rise this year was 3% so I'm poorer. Oh and wait till the big chains have to add any extra fuel costs to the cost of producing.
4. The thought that this could go on for years strikes me with dread how long will it be before i can see my pay rise outstrip inflation? A long time I'm guessing.
5. Living longer? Hmm obese time bomb is reported all. Those of us who look after ourselves will have to work until we're 75 to pay the NHS bill for all those who are clinically obese. Apart from that yea doing fine thanks.
Phil Riley, London

Interesting about house prices. Of course these statistics are based on actual completed sales so are misleading. Bearing in mind that from the day somebody offers to buy a house to the day it completes and then another delay for the data to be released is on average about 4 months. So all we are really seeing here is the same data Halifax and Nationwide were showing at the beginning of the year and its predictable where this data from the government is heading over the next 3 months.
Mr J Hunt, Hertford

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific