Cover of MoneyWeek magazine issue no 434

False signs

8 May 2009 / Issue 434

Why the economy has further to fall...PLUS:

  • Paul Hill: Buy BSkyB and profit from the recession
  • City view: Why Obama will just make the crisis worse
  • Bill Bonner: Better dead than alive

Excerpt

I’m a blip, not a green shoot

Regular readers will want to take a deep breath. Sit down, perhaps. Ready? Here goes. This week I have looked at two houses, both of which would suit quite well. I am thinking of putting in a bid on one of them. Shocking stuff, right? But there’s more. Last month my husband and I scrapped our old Golf and made one VW dealer’s year by buying a new car. And just today I went on the internet to look at prices for a new pram (not an eBay one, a new one).

The bulls will look at this and consider me something of a one-woman green shoot. But then the bulls seem to be able to turn just about any old piece of statistical irrelevance into a green shoot. There was the fact that Nationwide reported house prices falling by only 0.4% in April, a minute shift upwards in mortgage approvals, a rise in consumer confidence and, says The Times, “glimmers of hope” from key purchasing managers’ surveys of the services and manufacturing sectors.

But all these bits and bobs of goodish news are nothing next to the wider picture, the one in which our banking crisis remains unresolved, unemployment is rising fast, UK GDP is contracting at its fastest rate for decades, and both corporate and personal bankruptcies are soaring. The rise in consumer confidence only makes sense when you remember that it is still very low by historical levels, that low interest rates make people with lots of debt happy, and that the most recent survey was taken before Alistair Darling’s latest misery Budget.

• Read the full editor’s letter here: I’m a blip, not a green shoot