Bank of England quarterly inflation report summary

Well Neil, you will be pleased to know that I read your article right to the end this time and I actually understood it too.

I can't believe I'm saying this but I actually found it quite interesting too.

Now the question I have is this; am I getting more intelligent or are you getting better at writing articles so that normal people like me can actually understand them? 🙂
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Reply to the comment left by "Mark Alexander" at "14/02/2014 - 12:11":

I will take that as a compliment I think 🙂

As I see it, the key issue is how sustainable this recovery is ? As pointed out by Neil, "growth was largely caused by household spending even though incomes are stagnant and not any productivity increase".

So recovery was/is driven by household spending, but household spending is driven by, err, nothing ? To me this recovery does not have a sound foundation that I can identify, so I am very cautious.

One can obviously ask why then households spend more ? Because house prices went up. And why did they go up ? Because the cash buyers are forced to invest some of their money in property, and because foreign buyers are pushing London prices through the roof.

"Yes “Forward Guidance” is dead because the Bank of England got their unemployment prediction wrong, but we still don’t really know why."

A forecast can only ever be based on assumptions relating to a multitude of factors. As an example a corporate entity will revise it's detailed 3 month cashflow forecast every month. The factors which impact the forecast are outside the entitys direct control.

Carney’s “simplification”did its job. It has given businesses and households the confidence to invest or spend, and despite the fastest rate of job creation on record, future rates expectations have remained well anchored.

Interesting article from Neil, thank you.

On the side-issue of the rapid rate of fall in unemployment...

It is worth remembering that 'unemployment' is actually only those who are recorded as claiming benefits. So if a government causes the DWP to tighten up the rules, barring claimants from benefit for infringements such as turning up 2 minutes late, not applying for enough jobs etc that can have a significant impact on the number who are then eligible to claim unemployment benefit.
Those people would still exist, would still be unemployed, but would not appear on the government figures...

Remember 'Lies, damned lies and statistics'

Reply to the comment left by "Polly Nottingham" at "15/02/2014 - 11:27":

You don't know how right you are Polly, or maybe you do !!

- A friend of mine has cause to visit the DWP offices on a regular basis, she has been stopped her benefit for being late, 10 minutes late.
- The 'little hitler' who decides when she needs to turn up for her job search deliberately put her time for this at the same time as her signing on time, so no way can she turn up on time !!
-She has protested to higher officers, and eventually got the time changed, but not until she has already been stopped her benefit for 4 weeks.

She tells me, some weeks they sanction loads of people for minor things, and other weeks, they 'let them off' - she says they have targets to meet, so are sometimes more strict.
These people are mostly the ones who don't know how to fight back or who to turn to for help, so just give in and struggle on.

I wonder from how high up these 'dictates' come, to sanction people for anything they can pick on.

Reply to the comment left by "Polly Nottingham" at "15/02/2014 - 11:27":

Hi Polly,

I did not go into it for fear of sending Mark to sleep, but a factor you have recognised is actually statistical fact.

The average consistent percentage over the last 20 years of people in part time work because they could not get full time work was 3%, but that has recently increased to 5%. This does not sound like a lot but it is a 66% increase. There are also no statistics on the huge numbers of people who were made redundant and started new businesses becoming self employed.