|As we now know, in the first quarter of this year, the UK economy defied the gloomsters and expanded by 0.3pc. So everything’s all right, then? Not quite.
GDP remains about 2.5pc below its previous peak, and about 16pc below where it would have been if the pre-crisis trend had continued. The UK may not be in a technical recession as conventionally defined but it is still in a slump worse than anything seen in modern times.
One of my readers has asked me why, if things are that dire, the shops are so crowded and restaurants are so difficult to book. In short, where is the everyday experience of economic misery? It is a very good question.
Part of the answer is that even when some bits of the economy are doing badly, other bits will be doing well. The overall figures are an average of some very different experiences. Those who are fortunate enough to be prospering must recognise that millions of their fellow citizens most assuredly are not.
Over the past four years, the number of people using food banks run by the Trussell Trust, which distributes free food, donated by supermarkets, other businesses and individuals, has increased from 25,000 to almost 350,000. These are people who are not going shopping much, and are certainly not going to restaurants.
In fact, spending in pubs and restaurants has fallen by about 10pc from its peak, and the number of shoppers has fallen even further. One of the reasons it may be harder to book a table in your favourite restaurant is that since 2009, the number of restaurants has fallen by 5pc. The same could be said for pubs, whose numbers have been falling sharply, thereby concentrating customers on the ones that have survived. And when they go out, on average, people are spending less.
You may think that the Bank of England confines its attention to esoteric matters of monetary affairs but it has reported that although people seem to be going to the cinema as often as before, they are spending less on incidentals such as popcorn. (This is known in the technical economics literature as “the popcorn effect”.)
A large part of the contrast between the gloom reported in official statistics and the buoyancy reported in much of the media is down to the influence of London. Over the past couple of difficult years, despite the downturn in the City, London’s businesses have been doing well.
And in 2012, London had a stellar year with the Olympics, Paralympics and the Queen’s Jubilee.
The trouble is that the typical member of the commentariat rarely ventures north of the Watford Gap. In fact, they probably don’t even get as far as Hendon. Out in the London suburbs, you can see the same signs of trouble as in the rest of the country: on the high street, where, over the past five years, the shop vacancy rate has risen from 4pc to 14pc; at work, where the office vacancy rate has risen from 11pc to 16pc; at the Jobcentre, where there are 200,000 fewer job vacancies; and in the housing market, where the number of transactions is down by about 50pc.
Meanwhile, the number of passengers at airports is 9pc lower and the roads are somewhat less congested because we are driving about 3pc fewer miles.
These reductions may seem pretty minor. Yet even the direst economic downturns are marginal affairs. Most people carry on with their lives much as before. The extent of today’s slump is gauged not so much by the fall in output from the previous peak, but rather in the failure to grow normally. This absence of what might have been is not felt the same way as an outright decline of the same magnitude.
Moreover, it is now 20 years since the previous UK major downturn in the early 1990s. Over this period, personal disposable incomes have increased by about 65pc. So any given fall from the recent peak would still leave people at a much higher standard of living than would have been the case 20 years ago.
Indeed, although, on average, people have recently endured a larger fall in real earnings than anything experienced for 100 years, this has only taken them back to the level of 2004. Furthermore, although unemployment has risen substantially during this downturn, it has remained remarkably low given the weakness of the economy. Relatedly, there have been few large company failures compared to the industrial carnage of the early 1980s.
Meanwhile, the welfare system is much more generous than it was then, let alone what it was like in the 1930s.
So the economic downturn is not an illusion. Indeed, it is ruining many people’s lives, particularly among the young, who cannot easily get started in the world of work. But as the old adage puts it, things aren’t what they used to be. This applies even to slumps.