Is it over? David Smith, writing inThe Sunday Times, thinks it is. The last quarterly rise in GDP has taken us "within a whisker" of ourpre-crisis peak, something that suggests we are "waking from the nightmare Britain entered seven years ago".
Consumer confidence is high. Strong rises in employment are evident. And real pay is rising: in the last three months we have the numbers for, private sector pay rose by 2%. That's a little more than inflation.
This is all true. Indeed, anyone who came to the MoneyWeek Conference last week will know that we think today's GDP might be even higher than the statistics suggest the numbers don't capture collaborative consumption and aren't good at capturing the black and grey economies.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, while the worst of this part of the crisis may be over, that doesn't mean we are on the way to getting back to anything like what we might have considered normal pre-crisis.
This is a new kind of normal. It is one in which most markets remain artificially boosted by quantitative easing (the US), expectations of QE (Europe), or just super-low interest rates (almost everywhere else).
It is one in which savers are expected to get consistently poorer, while debtors are helped to get a little richer; one in which rates can't rise because mortgaged households can't cope; and one in which much of the rise in employment is accounted for by self-employment and zero-hours contracts.
It is one in which most public sector debts are still at historical highs; and one in which, despite all this, there is little appetite for real falls in government spending. It is also one in which a new debate on inequality one that could fundamentally change the political environment is fast taking hold.
Anyone sentient will by now have heard of French economist Thomas Piketty and his best seller,Capital in the Twenty-First Century. They will know his basic argument that thanks to the fact that returns to capital are higher than the rise in GDP in most countries, wealth inequality is high and rising, and so must be countered with wealth taxes and super high income taxes. And they will know this argument has been adopted by pretty much every politician, columnist and bureaucrat out there.
We've been talking about this subject in the magazine and on the website for some time now and we will come back to it many more times (we don't entirely buy Piketty's story).
But for now it is worth noting that, as a result of QE and the sense of insecurity it has given so many people, the crisis has created this discussion.
That's why we hear so much about rent controls, about wealth taxes, about property taxes and about energy price controls. And why the new normal is likely to be rather less capitalist then the old normal.
-
Why CEOs deserve a pay riseOpinion The CEOs of big companies often come under fire for being grossly overpaid. But the truth, as per some economists, is the opposite. Do they merit a pay rise?
-
Europe prepares to stand alone as Trump turns on UkraineSupport for old military alliances is wavering in the US under Donald Trump. Europe’s leaders are rushing to fill the void. Simon Wilson reports
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
-
Car hire and the strangeness of the post-pandemic economyEditor's letter A global shortage of hire cars and unusually high hotel occupancy rates sum up the post-pandemic global economy in a nutshell, says Merryn Somerset Webb, with enhanced demand meeting restricted supply.
-
Everything is getting more expensive – including moneyEditor's letter Investors are about to start feeling rather more pain, says Merryn Somerset Webb – from the rising price of money.
-
We may be heading for recession – and it will be no ordinary recessionEditor's letter Just as the downturn in 2020 was not a typical recession. the next downturn could be very different too, says Merryn Somerset Webb.
-
What companies should be prioritising this decadeEditor's letter In a world beset by uncertainty, companies should be prioritising slack over efficiency, says Merryn Somerset Webb.
-
Inflation could soon start to hurtEditor's letter Inflation is not going away. And with people's wages not keeping up, things are going to start to hurt, says Merryn Somerset Webb.
