Reasons to be cheerful
If you believe everything (or even anything) you read in the papers then you’ve probably come to the conclusion that the economy is in a whole world of fecal matter. Insane oil prices have driven up costs for just about every business, house prices are diving and millions upon millions of people are being crushed by the credit crunch.
Well, thanks to the BBC, there are still five reasons to be cheerful. It would seem that the media might not be accurately reporting the true state of affairs with the economy after all. Who’d have thought it eh?
For 10 years, word had it that our economy was on a path of roses. That path now seems strewn with cut-up credit cards.
Caught between the evils of the credit crunch and the oil price – prompting falling confidence and rising inflation – the authorities seem stuck. They watch, and wait, and hope… while Gordon Brown chews his nails.
But what does the data show? Though some people unquestionably face a rough time, has the gloom been overdone? If you are a house buyer not a house owner, for example, falling prices are good news. Dig into the statistics – if you believe the statistics – and you might even wonder if there’s a media conspiracy to depress us by avoiding anything positive.
I like this sort of reporting. Let’s looks at the news from a different viewpoint and perhaps we’ll see that things aren’t quite so bad after all.
Let’s be frank though. Those oil prices are really, really bad news. The global economy could be sunk, or at least crippled, buy its reliance on oil. That one substance is linked into so many costs for so many businesses that the recent enormous jumps in price are causing all sorts of problems. However, many of us won’t be as affected as you’d expect it seems.
Swallow hard […], but squeezed incomes are good – for now. How come? The rising oil price has made us poorer. The Bank of England Governor Mervyn King’s big fear is that we will all try to compensate with higher pay, and this will feed into even higher prices and an inflationary spiral, forcing him to raise interest rates.
So data this week showing that income growth is down a smidgen – from 3.9% a year in April to 3.8% in May – will have Mervyn sighing with relief. Yes, it means we all face a lower standard of living as prices outstrip earnings. But if we bite that bullet rather than trying to match inflation, inflation will soon plummet and recovery will be quicker. If we try to avoid the pain, the Governor will feel no choice but to make us pay, perhaps more heavily in the end. A little medicine now, or a lot later? That’s right, even bad news on pay could be good news really.
I think that this is a bit of a stretch for a reason to be cheerful but it does offer a smidgen of hope that interest rates aren’t going to be raised too far to cope with inflation.
Still, I, personally, have an awful lot to be cheerful about. I’m recently married to an utterly amazing woman, I’m not being made redundant (at the moment!) and I’m looking forward to a new period of my life. Bugger the price of oil – I’m bloody well going to love my life no matter what happens!