{"id":2674,"date":"2008-10-24T09:49:55","date_gmt":"2008-10-24T09:49:55","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2674"},"modified":"2025-03-27T15:48:44","modified_gmt":"2025-03-27T15:48:44","slug":"poor-gdp-number-shortens-odds-of-full-point-uk-rate-cut","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2674","title":{"rendered":"Poor GDP number shortens odds of full-point UK rate cut"},"content":{"rendered":"<p>The 0.5% decline in GDP in the third quarter understates the scale of recent economic deterioration. A weighted average of monthly series for services and industrial output in July was slightly above its May \/ June average. The economy appears to have fallen off a cliff in August and September as the financial crisis escalated.<\/p>\n<p>The GDP decline is consistent with an average path derived from the 1974-75, 1979-81 and 1990-91 recessions &#8211; see the chart below and the previous post for more details. The average path would involve GDP falling by 2-2.5% between the second quarters of 2008 and 2009, moving sideways over the following year and recovering by 2.5% in the year from the second quarter of 2010. Output would regain its recent peak level only in 2011.<\/p>\n<p>This profile would imply an annual decline in GDP of 1.7% in 2009 followed by growth of just 0.4% in 2010 &#8211; significantly weaker than current consensus forecasts of -0.2% and 1.2% respectively (as reported by Consensus Economics Inc).<\/p>\n<p>Incorporating the third-quarter fall into the MPC-ometer confirms the forecast of a cut in official rates of 75-100 basis points on 6 November. The model favours a full-point move if three-month LIBOR is still above 5.75% at the time of the meeting.<\/p>\n<p>&nbsp;<span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/UK-GDP-vs-average-recession-path.jpg?__SQUARESPACE_CACHEVERSION=1225894780847\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The 0.5% decline in GDP in the third quarter understates the scale of recent economic deterioration. A weighted average of monthly series for services and industrial output in July was slightly above its May \/ June average. The economy appears to have fallen off a cliff in August and September as the financial crisis escalated. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2674","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2674","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2674"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2674\/revisions"}],"predecessor-version":[{"id":4983,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2674\/revisions\/4983"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2674"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2674"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2674"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}