Are we talking ourselves into recession?
Last Thursday, I was a guest at Drivers Jonas's annual crane survey for Birmingham. As its name suggests, this is a review of development in Brum's city core (measured by the number of cranes in the skyline) over the past 12 months. The survey results themselves were upbeat. This isn't a surprise (or shouldn't be) - there have been (and continue to be) lots of cranes in the sky.
And the survey wasn't all doom and gloom for the next 12 months. Although the residential market is going to slow significantly (just how many more studio apartments does the city centre need?), there is plenty of Grade A office space coming on stream.
However, the people I talked to over breakfast were uniformly downbeat about prospects for the next 12 to 24 months. Predictions ranged from the jokey - "I will be spending a lot of the next 12 months reducing my golf handicap" - to the downright suicidal - "It's 1929 all over again".
It's not just Brum's property and construction industries that are worried. A quick scan of the headlines suggests that people are concerned about at least some or all of the following: house prices are falling; interest rates are on the up; the price of fuel and food is increasing radically; you can't get a mortgage for love nor money; America's economy seems to be in an even worse state than ours; and the great and the good all seem to be predicting doom and gloom.
If you believe the pessimists, we are either in recession already or headed that way at a rate of knots. But, with all the authority I can muster from having got an A in an economics exam 21 years ago, I'm not so sure.
Hopefully more persuasively. I've also come across this very interesting article by Anotole Kaletsky in which he (with a lot more authority, knowledge and ability than I can) challenges the assumption that America is in recession. His basic argument is that a downturn in the housing and banking industries is just that: a downturn (albeit a painful one) but not a recession.
I can't help but wonder if the same argument doesn't apply to the UK. That's not to decry the difficulties people are facing, or that we live in challenging times, but are we really in recession? To pinch the definition used in Kaletsky's article - "A recession is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income and wholesale-retail trade. A recession influences the economy broadly and is not confined to one sector." - the argument goes that we have not actually seen evidence of that.
Which brings me onto the question posed at the start. If we are not actually in recession, isn't there a danger that we will convince ourselves that things are worse than they really are? What do people think?