Morning Economics Roundup – Thursday 31st December 2009

Data to be released today;

Bank of England Quarterly Credit Conditions Survey – at 9.30 am – available from here.

Big themes of the day;

House prices up annual 5.9% – House prices rose for an eighth consecutive month in December to end the year nearly 6 percent higher than they started it, mortgage lender Nationwide said on Thursday. see Reuters.

UK standard of living drops below 2005 level – “The recession has pushed living standards in Britain to below the 2005 general election level, a leading thinktank says as it warns that the country faces a “new age of austerity”.Although many economists think the economy probably returned to growth in the quarter just ending, the deepest recession in decades has punished everyone, according to a report by Oxford Economics”. – see report by Ashley Seager and Biba MCaul in The Guardian here. Original Oxford Economics press release pdf here.

Iceland approves £3.4bn Icesave losse deal – “Iceland’s parliament has agreed to pay back €3.8 billion (£3.4 billion) lost by British and Dutch savers when its banking system collapsed, in a move that is likely to boost the country’s bid to join the European Union”. – see The Times here.

Comment and blogs of the day;

The economic ‘experts’ who stopped making sense. Edmund Conway in the Telegraph marvels at how economists have had a bad year and got away with it – “2009 ought to have been the year that economists well and truly fell from grace. There is surely adequate ammunition to explode any remaining faith in their powers of prediction: the scale of the economic slump, the rise in unemployment, the fact that a small number of extremely rich people have been getting richer while the majority have suffered. But bizarrely enough, it hasn’t happened. Sure, there has been plenty of muttering about economists’ shortcomings; the groans at their failed forecasts (for instance, the fact that house prices, far from falling by 10 per cent this year as predicted, have actually risen by around 3 per cent) are louder”. see here.

The recovery of the housing market: A year of two halves – “This time last year, the headlines were full of doom for the housing market. Prices had already dropped sharply following the collapse of Lehman Brothers in autumn 2008, and all the indications were that they were poised to fall even further — with the gloomier analysts expecting declines, in percentage terms, of at least double figures. Well, what a difference a year makes”. Lucy Denyer in The Times here.

That was the noughties. “We were promised no more boom and bust. We were told Labour would be kind to manufacturing. It would all be so much better than the Thatcher years. We know the claim of no more Boom and Bust proved to be the most absurd. We lurched from super boom to mega bust. What is less well known is just how bad a decade it has been overall, despite the boom”. John Redwood MP’s diary here.

New economics of christmas, a review of the Scroogenomics book by Joel Waldfogel – “Waldfogel is right to question how much just producing precious commodities adds to social welfare. In trying to adjust measures of exchange value to better reflect the worth of things he comes close to much of the work that nef has been pioneering. At the same time, Waldfogel suffers from a bias that is not untypical to people of his profession”. Aleski Knuutila at the New Economics Foundation blog here.