It's all good news!

ntlbell

So,

before Mick Wallace was on primetime the papers and tv pretty much downplayed how bad things were and since then the papers and RTE are picking up on a lot of doom and gloom stories.

For the layman like myself is there much good happening in the economy at the moment? have we much growth to look forward to in the next 3-5 years?

rediguana

Who's Mick Wallace?

Guys gotta mind their own patch. What do I care if the unemployment rate is creeping up? Long as my job is safe and I'm moving upwards (far too slowly in my case, but that's a different story), the whole economy can crash and burn.

My brother works in construction. Now he's saying work's hard to come by. Whole family been telling him to diversify for years.

People in certain areas get squeezed in a downturn, others just need to readjust to a not-quite-as-shameful-level-of-affluence.

Good as it's ever been, better!. Whole thing is relative.

Ekancone

Builders need to get realistic with their wage demands, the boom is over and it aint coming back. But that doesn't mean we are heading for doom and gloom either, just a sane level of growth.

nesf

Downturns are good healthy things for economies so long as they aren't too deep or too prolonged. The building industry for instance got pretty damn inefficient over the past decade and there were/are a lot of "cowboys" in the industry. Those lads will be squeezed out over the next few years (and unfortunately plenty of good lads who get unlucky will lose their jobs too) but we'll be left with a more realistically sized building industry when the economy picks up again. We've far more people working in construction than we need for the next couple of years and the market will correct that, though not without some pain for people.

Things will be tighter for the next few years and the housing correction will squeeze people's pockets/wealth/spending a bit but these things happen in modern economies, you've just got to accept it tbh, you can't have booms without busts etc. Our economic growth looks to be slowing but we're nowhere close to a seriously bad recession in growth terms.

Économiste Monétaire

No one truly knows the answer to your question OP, you have to look at the indicators and make up your own mind. If you want to look at the data about growth, the current projections for growth in real GDP for 2008 is 2.3% (which is above the 1.7% forcasted growth rate for the euro area) and is supposed to pick up to 3.2% in 2009.

For unemployment the CSO has the Seasonally Adjusted Standarised Unemployment Rate at 5.5% for April, an increase from 5% in January. So unemployment is increasing but keep in mind we're better than the EU average of 7.1% in 07.

I also have no clue who Mick Wallace is.

Heisenberg.

This post has been deleted.

gurramok

That article is based by a govt funded think tank is based on alot of farcical assumptions NS, especially the part about 48,000 houses, bloody hell, a sustainable economy should not be depended on the amount of houses built!!

GNP declined in Q4 '07. Latest indications from retail sales for Jan/Feb/Mar show an approx 2% yoy decline along with the mounting unemployment.

That means the dreaded R word for 2 consecutive quarters of negative growth, we won't know officially till next month for CSO stats on quarter movements but it ain't looking good at all, more like recession.

Économiste Monétaire

gurramok wrote: »

That article is based by a govt funded think tank is based on alot of farcical assumptions NS, especially the part about 48,000 houses, bloody hell, a sustainable economy should not be depended on the amount of houses built!!

GNP declined in Q4 '07. Latest indications from retail sales for Jan/Feb/Mar show an approx 2% yoy decline along with the mounting unemployment.

That means the dreaded R word for 2 consecutive quarters of negative growth, we won't know officially till next month for CSO stats on quarter movements but it ain't looking good at all, more like recession.

1) The ESRI is an independent body. Government funding accounts for only one-third of its budget.

2) The review didn't solely focus on the construction industry. 48,000 is a reduction from 2005 levels of 81,000. Also, could you point me to where the review states that the Irish economy is "depended" on the housing sector? In the Executive Summary it labels the financial sector as key to Irish Economic growth, not the housing sector.

3) Unemployment is 5.5% as of April 2008. There is no change from March and a .5% increase from the start of the year. That hardly constitutes "mounting unemployment".

gurramok

gurramok wrote: »

That article is based by a govt funded think tank is based on alot of farcical assumptions NS, especially the part about 48,000 houses, bloody hell, a sustainable economy should not be depended on the amount of houses built!!

The fact that you don't even know who the ESRI are would lead me to suggest that your opinions aren't quite as well informed as perhaps Prof. Frances Ruane, Dr. Sean Lyons or Prof. Toll.

Armchair economists strike again!!

gurramok

UCD_Econ wrote: »

1) The ESRI is an independent body. Government funding accounts for only one-third of its budget.

Hence it depends on govt funding even if it's only one third. They have been wrong before, did they forecast the downturn as severe as it is?

Forecasting for 2010 and beyond is reckless especially based on alot of assumptions that may or may not happen, no-one knows what exactly will happen beyond then.

UCD_Econ wrote: »

2) The review didn't solely focus on the construction industry. 48,000 is a reduction from 2005 levels of 81,000. Also, could you point me to where the review states that the Irish economy is "depended" on the housing sector? In the Executive Summary it labels the financial sector as key to Irish Economic growth, not the housing sector.

If the Irish economy is so resilient, why did they mention 48,000 houses then?
An economy should not be dependent on how many houses are built. You don't hear any other western economy so focussed on construction for its growth.
And the financial sector which some of is linked to construction(that €100bn that developers owe banks) is the source of growth in a credit crunch?

22% of Irish GNP depends on construction, Finfacts do a good review on the Irish economy and its problems, have a look at their website.

UCD_Econ wrote: »

3) Unemployment is 5.5% as of April 2008. There is no change from March and a .5% increase from the start of the year. That hardly constitutes "mounting unemployment".

No change from March was Easter arriving early. It doesn't take an economist to know that there are too many employed in construction and that sector will lay off as the downturn bites.

Deleted User wrote:

The fact that you don't even know who the ESRI are would lead me to suggest that your opinions aren't quite as well informed as perhaps Prof. Frances Ruane, Dr. Sean Lyons or Prof. Toll.

Err, just stated above that they are not wholly independent. It seems you do not know who funds them?

Deleted User wrote:

Armchair economists strike again!!

Ain't we all.:D

UCD_Econ

UCD_Econ wrote: »

1) The ESRI is an independent body. Government funding accounts for only one-third of its budget.

2) The review didn't solely focus on the construction industry. 48,000 is a reduction from 2005 levels of 81,000. Also, could you point me to where the review states that the Irish economy is "depended" on the housing sector? In the Executive Summary it labels the financial sector as key to Irish Economic growth, not the housing sector.

3) Unemployment is 5.5% as of April 2008. There is no change from March and a .5% increase from the start of the year. That hardly constitutes "mounting unemployment".

1) I know from experience working in these types of areas just how "independent "they can be

2) Over a quarter of a million jobs depend on construction

3) Unemployment is rising at an increasing rate. Just as Construction is slowing...

Économiste Monétaire

gurramok wrote: »

Hence it depends on govt funding even if it's only one third. They have been wrong before, did they forecast the downturn as severe as it is?

No matter how much you try to bend the facts, the ESRI is not a government body and is not solely dependent on government funding. 2.3% of a decrease in retail sales is not evidence of a severe downturn.

Forecasting for 2010 and beyond is reckless especially based on alot of assumptions that may or may not happen, no-one knows what exactly will happen beyond then.

Pleas list the variables they used in their forcast and how they constitute as reckless. It is in their educated guess from evidence available what might happen. It is not a crystal ball for the future, ether believe it or don't.

If the Irish economy is so resilient, why did they mention 48,000 houses then?
An economy should not be dependent on how many houses are built. You don't hear any other western economy so focussed on construction for its growth.

The figures are used for comparison because the industry has got so much attention in the media the last few years. There was one line in the executive summary about housing. Please point me to where the ESRI (not an Rte report) states that the Irish economy is so dependent on the construction industry.

22% of Irish GNP depends on construction, Finfacts do a good review on the Irish economy and its problems, have a look at their website.

You trust Finfacts before the ESRI? The construction sector accounts for 9.4% of GNP, not 22%.

http://www.cso.ie/releasespublications/documents/economy/current/qna.pdf

It is you who needs to read the figures.

No change from March was Easter arriving early. It doesn't take an economist to know that there are too many employed in construction and that sector will lay off as the downturn bites.

You already said there is a "severe downturn". Hence, if there was then unemployment would have risen further than .5% from the start of the year.

Find some figures for your opinions, otherwise it's just dribble.

Blindjustice wrote:

2) Over a quarter of a million jobs depend on construction

3) Unemployment is rising at an increasing rate. Just as Construction is slowing...

You assume every person in the construction will lose their jobs.

Again, the unemployment figures and their increases don't constitute being called severe. It has risen .5% from the start of the year.

Edit: Have you worked for the ESRI? What 'types of areas' are you referring?

BigglesMcGee

Just a reminder for those who were in nappies in the 80's.

Things are not bad now. Things are bad when NOBODY you know has a job. When people are drawing the dole and supplement ing it with the under the table day or 2 a months work they get shovelling ****.

nesf

Deleted User wrote: »

1) I know from experience working in these types of areas just how "independent "they can be

Then why were they saying in 2005 that a soft landing was unlikely? If they were in the pocket of the Government, banks or the builders they'd have been presenting it in a much rosier light like the banks and builders were doing.

Deleted User wrote: »

2) Over a quarter of a million jobs depend on construction

Sure, but how many of those are transient and how many of those people will simply move to the London for the Olympics building or similar? Losing so many people from one are will impact on the public finances but conversely if the financial services industry continues to grow we will have a stream of immigrants looking for jobs in that. That, and how many of the people in construction are trapped there? Can they reskill and move to a different sector?

Deleted User wrote: »

3) Unemployment is rising at an increasing rate. Just as Construction is slowing...

Yes, because of course the only factor we need to take into account when predicting unemployment figures is one sector. If employment in construction goes down but financial services or any other sector goes up, we could have a stabilisation of unemployment figures or even a reduction below 5% again (though this is unlikely and also, perhaps, not welcome).

Ekancone

gurramok wrote: »

Hence it depends on govt funding even if it's only one third. They have been wrong before, did they forecast the downturn as severe as it is?

Forecasting for 2010 and beyond is reckless especially based on alot of assumptions that may or may not happen, no-one knows what exactly will happen beyond then.

Do you even know what economic, or even scientific, modelling entails?

gurramok wrote: »

If the Irish economy is so resilient, why did they mention 48,000 houses then?
An economy should not be dependent on how many houses are built. You don't hear any other western economy so focussed on construction for its growth.

Thats funny, a downturn in the housing market in the United States was a sufficient determinant for a recession to ensue.

gurramok wrote: »

And the financial sector which some of is linked to construction(that €100bn that developers owe banks) is the source of growth in a credit crunch?

There is no credit crunch in Ireland, nor will there be. I suggest you start reading beyond pop economics and do some actual research into this matter.

gurramok wrote: »

22% of Irish GNP depends on construction, Finfacts do a good review on the Irish economy and its problems, have a look at their website.

No, why don't you explain it in your own words.

Ekancone

Deleted User wrote: »

1) I know from experience working in these types of areas just how "independent "they can be

2) Over a quarter of a million jobs depend on construction

3) Unemployment is rising at an increasing rate. Just as Construction is slowing...

Wow, how insightful.

daithifleming

daithifleming wrote: »

There is no credit crunch in Ireland, nor will there be. I suggest you start reading beyond pop economics and do some actual research into this matter.

Nice, how insightful...care to explain it further? Or are you afraid it will go over all our heads? Why will there be no credit crunch in Ireland? How come many loan products are being removed?

The Center for European Policy Studies reckon:

A downturn in
housing prices might depress consumption somewhat, but not construction investment. By
contrast, in Spain and Ireland, construction investment has increased to levels (18-20% of GDP)
not seen in any other OECD country except Japan. In these two countries, lower housing prices
are likely to be associated with a sharp and prolonged drop in domestic demand.

http://shop.ceps.eu/downfree.php?item_id=1545

Économiste Monétaire

Deleted User wrote: »

Nice, how insightful...care to explain it further? Or are you afraid it will go over all our heads? Why will there be no credit crunch in Ireland? How come many loan products are being removed?

Because Irish banks have not (so far) been exposed to American mortgage backed securities. This isn't Econ101. You may want to read why the 'credit crunch' in America came about and then look for comparisons to Ireland.

Also, why would you quote something you don't understand? A link to the full article would help, not just a paraphrased section.

Ekancone

Deleted User wrote: »

Nice, how insightful...care to explain it further? Or are you afraid it will go over all our heads? Why will there be no credit crunch in Ireland? How come many loan products are being removed?

The credit crunch stem from a lack of funds being available on the inter-banks market, because banks are unable to tell which banks are having either liquidity or solvency problems. Neither of these problems apply to the Irish banking system, as Irish banks are amongst the most highly capitalised in the world, and recent stress tests have shown that their loan-loss ratio would have to increase by a factor of six before the Irish banking system would run into trouble, so I'm afraid your little fantasy about the Irish banking system hitting the rocks is just that, a fantasy.

Deleted User wrote: »

The Center for European Policy Studies reckon:

Right, which is discussing the construction sector, would you care to expand your analysis?

UCD_Econ

UCD_Econ wrote: »

Because Irish banks have not (so far) been exposed to American mortgage backed securities. This isn't Econ101. You may want to read why the 'credit crunch' in America came about and then look for comparisons to Ireland.

Also, why would you quote something you don't understand? A link to the full article would help, not just a paraphrased section.

added a link
Your right its not econ101, its alot more than a one sentence answer
Which is WHY is asked for further explanation!!

daithifleming

daithifleming wrote: »

so I'm afraid your little fantasy about the Irish banking system hitting the rocks is just that, a fantasy.

Where did I say here that they were about to hit the rocks?
I added to this thread simply that there were over 250,000 construction jobs and that the rate of unemployment was increasing

and everybody goes over the top about doom and gloom and fantasies about banking systems hitting the rocks!!!!!!! :eek:

Ekancone

Deleted User wrote: »

Where did I say here that they were about to hit the rocks?
I added to this thread simply that there were over 250,000 construction jobs and that the rate of unemployment was increasing

and everybody goes over the top about doom and gloom and fantasies about banking systems hitting the rocks!!!!!!! :eek:

You asked me why there would be no credit crunch in Ireland, and I explained that. I think it is a prime case of how having an oligopoly can actually be a good thing sometimes.

nesf

Deleted User wrote: »

Nice, how insightful...care to explain it further? Or are you afraid it will go over all our heads? Why will there be no credit crunch in Ireland? How come many loan products are being removed?

Go read the minutes of the ECB meeting from the past year. Across the Euro-zone the credit markets haven't tightened to the extent that the US has. Anyone telling you that we, in Ireland, are going through the same credit crisis that the US banks are at the moment is either lying to you, doesn't know what they're talking about or haven't bothered to even check the figures for what's been happening in Europe.

Loan products are being removed because of a declining property market, banks are tightening their lending in response to that. Regardless of what was happing in the US this would happen when the correction started in the Irish housing markets. There is some upwards pressure on Irish bank interest rates because of rising rates on the Inter-bank funds markets but it's 1) not been that severe and 2) been limited because the models used in Irish banks for the most part source more of their funds from other sources than the inter bank markets, versus say Northern Rock who ran into a lot of trouble because of their over-reliance on the inter bank markets and the inflexibility of their business model.


European banks did not get hit by the same liquidity pressures as the US banks for many reasons, one of the easiest ones to understand for non-economists is that the ECB will give loans to banks based on a very broad range of collateral versus the The Federal Reserve whose system (at the point of the crunch) was much more restrictive in terms of the kinds of acceptable collateral and who they gave money to (the Fed's system for instance, was to give loads to a handful of big players with the idea that the smaller players would then borrow off them and liquidity would flow through the system. What actually happened was these big players just hoarded liquidity themselves and didn't loan it out to other people, aggravating the entire problem). The ECB went into this crisis with a much easier way of injecting liquidity into the financial system than the Federal Reserve and one of the outcomes was that the impact of the crisis in Europe was nowhere near as bad in this respect than the initial impact in the US.

That's only one out of many factors at play but honestly, I don't have the time to go into a huge amount of detail here and list them all out. The Economist's coverage of the credit crisis is a decent introduction to it for a non-economist, for a more technical appraisal look at the minutes of the Fed, ECB and Bank of England if you want more detail.

BigglesMcGee

BigglesMcGee wrote: »

Just a reminder for those who were in nappies in the 80's.

Things are not bad now. Things are bad when NOBODY you know has a job. When people are drawing the dole and supplement ing it with the under the table day or 2 a months work they get shovelling ****.

Tell ya what..if we are honest 80s Ireland wasnt that bad either...at least people werent dying of starvation. At least the dole was there to be claimed! Glad I was born in Ireland even with all the giving out I (and most of us give out) do!

Time Magazine

A few points:

1. Lulz at questioning the independence of the ESRI. They're constantly criticising government policy. I know for a fact that some of the people on this forum are in the employ of the ESRI and those of us who don't question their independence are those who are most engaged in economic research.

2. Economic forecasting is always based on assumptions. The primary assumption is "...so long as nothing hugely unexpected happens." You simply can't predict those things though. This is why growth forecasts were constantly revised down post-US credit crunch. Preliminary estimates for growth in 2010 should be considered just that.

3. Our banking sector is in a much less precarious position than USA's.

4. Our economy is so construction-intensive (and thus -dependent) at the moment because although our income exceeds our European neighbours, our wealth certainly does not. We have an infrastructural deficit that requires addressing, which means a lot of construction. The reason you don't see any other Western nation so dependent on construction is because nobody grew as fast as us over the past twenty years. We now need to bring our infrastructure up to speed because we only had halve the time to reach this level of income as other nations. Income can rise very quickly. Infrastructure typically takes a while.

gurramok

UCD_Econ wrote: »

No matter how much you try to bend the facts, the ESRI is not a government body and is not solely dependent on government funding. 2.3% of a decrease in retail sales is not evidence of a severe downturn.

I just dont trust their forecasts as they have been constantly wrong and this forecast just so happened to be released on the week a new Taoiseach comes to power, its damn suspicious nevermind its assumptions

GNP declined from Q3 to Q4 in '07. That's one half of a negative growth scenario to be considered as a recession. We'll know next month from the CSO if Q1 '08 is also declining, the indicators so far say yes.

UCD_Econ wrote: »

Pleas list the variables they used in their forcast and how they constitute as reckless. It is in their educated guess from evidence available what might happen. It is not a crystal ball for the future, ether believe it or don't.

Let me see...

ESRI forecast growth for 2008 of 2.3% in Dec 2007. They then revised the forecast in March 2008 to 1.6%

So they couldn't accurately predict growth for one year, and revised their position by a massive 0.7% in 4 months?

And they want us to believe they can predict the next 10 years?

UCD_Econ wrote: »

The figures are used for comparison because the industry has got so much attention in the media the last few years. There was one line in the executive summary about housing. Please point me to where the ESRI (not an Rte report) states that the Irish economy is so dependent on the construction industry.

It don't take an expert to realise that it does depend. Every 10,000 drop in the number of houses built means that GDP declines by 1%.
That is disturbing for a so called non-dependent economy on construction. No other Western economy(maybe bar Spain) is so dependent for its GDP on the amount of houses being built.

UCD_Econ wrote: »

You trust Finfacts before the ESRI? The construction sector accounts for 9.4% of GNP, not 22%.
http://www.cso.ie/releasespublications/documents/economy/current/qna.pdf

It is you who needs to read the figures.

Where did you get 9.4%?(this based on construction ONLY which i'm not talking about)...Finfacts are liars?
Remember, i'm not talking solely about construction, i'm talking about construction and and its related activity in banking(mortgaging, estate agents, insurance and the likes) and retail(furniture stores, hardware stores for example)

UCD_Econ wrote: »

You already said there is a "severe downturn". Hence, if there was then unemployment would have risen further than .5% from the start of the year.

This downturn is time delayed. It takes maybe average 18 months to finish a house.
Peak demand of housing was in mid '06, hence most of that demand is finally being built and the new demand has been slashed since then hence layoffs in construction,finance and retail

UCD_Econ wrote: »

Find some figures for your opinions, otherwise it's just dribble.

Again, you need to look at industries based on construction(banking and retail) where a construction downturn hurts the most.

UCD_Econ wrote: »

You assume every person in the construction will lose their jobs.

No, i do not. There are far too many employed there(from memory, was it one in five men work in construction related activity?)

At the moment, its been trimmed to sustainable levels. FAS themselves have stated that 80,000 jobs there are at risk and thats just based solely on construction itself, nevermind banking and retail.

UCD_Econ wrote: »

Again, the unemployment figures and their increases don't constitute being called severe. It has risen .5% from the start of the year.

The rise in unemployment has only started. It ain't no coincidence that the majority of new claimants are men, now how is that?

UCD_Econ wrote: »

Edit: Have you worked for the ESRI? What 'types of areas' are you referring?

No, have you?...Have i touched a nerve ??

Look at their forecasting beyond rose-tinted glassses

Re:daithifleming
Yes, the credit crunch is affecting Ireland. Why?...Just look at the Euribor rates which Irish banks depend on getting money when they are not getting it from customer deposits.
Euribor rates have shot up since the credit crunch hit and that why the likes of new tracker mortgages have been either withdrawn or have their rates raised.
Coupled with Irish developers owe Irish banks €100bn, we have a huge domestic problem in banking as its so dependent on construction related activity.
The US had widespread mortgage fraud in its banking system and thats why a recession might be happening there.(i'm not fully convinced a fully blown recession will bite there, they are no so dependent on construction related activity like us)
We have not have had widespread mortgage fraud other than dodgy 100% mortgages being issued which is not on a similar scale to over there.

Its the domestic issues which i highlighted above which is driving the recession here.

gurramok

Antithetic wrote: »

A few points:

1. Lulz at questioning the independence of the ESRI. They're constantly criticising government policy. I know for a fact that some of the people on this forum are in the employ of the ESRI and those of us who don't question their independence are those who are most engaged in economic research.

2. Economic forecasting is always based on assumptions. The primary assumption is "...so long as nothing hugely unexpected happens." You simply can't predict those things though. This is why growth forecasts were constantly revised down post-US credit crunch. Preliminary estimates for growth in 2010 should be considered just that.

3. Our banking sector is in a much less precarious position than USA's.

4. Our economy is so construction-intensive (and thus -dependent) at the moment because although our income exceeds our European neighbours, our wealth certainly does not. We have an infrastructural deficit that requires addressing, which means a lot of construction. The reason you don't see any other Western nation so dependent on construction is because nobody grew as fast as us over the past twenty years. We now need to bring our infrastructure up to speed because we only had halve the time to reach this level of income as other nations. Income can rise very quickly. Infrastructure typically takes a while.

Well, i do agree with point 2 and 3 and am suspicious of 1 which i have stated already

On 4, too mnay houses were built here, its gone beyond catchup in my opinion.
Every commentator on the housing front has stated that there is a huge over supply out there. Now to go from here to the next level is the biggest challenge.
The biggest problem is what has happened in the past 6 yrs or so. Most jobs that were created were either in the public/civil service, construction and related financial services and retail. They were not all sustainable and we know what happens when the national accounts go into deficit, public jobs are hit first.
The oversupply of labour in construction and industries that depend on it(some in finance and retail) will decline as they were not sustainable.

The infrastructure deficit will not take up all the downturn jobs been shed, its machines that build roads unlike labour intensive houses.
And regarding financial services as taking up the slack, cost competitiveness here ain't helping matters at all.
Thats why i questioned where is the future growth to come from in the ESRI report.

nesf

gurramok wrote: »

I just dont trust their forecasts as they have been constantly wrong and this forecast just so happened to be released on the week a new Taoiseach comes to power, its damn suspicious nevermind its assumptions

GNP declined from Q3 to Q4 in '07. That's one half of a negative growth scenario to be considered as a recession. We'll know next month from the CSO if Q1 '08 is also declining, the indicators so far say yes.



Let me see...

ESRI forecast growth for 2008 of 2.3% in Dec 2007. They then revised the forecast in March 2008 to 1.6%

So they couldn't accurately predict growth for one year, and revised their position by a massive 0.7% in 4 months?

And they want us to believe they can predict the next 10 years?

Eh, which part of economic forecasting is an inexact science don't you appreciate? Their estimates are best guesses based on economic theory and assumptions clearly laid out in their reports. The forecasts are inexact precisely because forecasting a single headline number like GDP/GNP growth requires forecasting a plethora of out figures from what that headline
is calculated. Any forecast of GDP/GNP figures is only as good as the underlying forecasts and that's where the debate really is if you know how to read these things.

That you're even talking about just the GNP number underlines that you don't grasp what's actually the point of this whole thing is nor the logic that underlays the prediction of these numbers.

Économiste Monétaire

gurramok wrote:

I just dont trust their forecasts as they have been constantly wrong and this forecast just so happened to be released on the week a new Taoiseach comes to power, its damn suspicious nevermind its assumptions

Suspicious? I think it’s time you took yourself to the conspiracy theories forum.

Let me see...

ESRI forecast growth for 2008 of 2.3% in Dec 2007. They then revised the forecast in March 2008 to 1.6%

So they couldn't accurately predict growth for one year, and revised their position by a massive 0.7% in 4 months?

And they want us to believe they can predict the next 10 years?

Ahh now this is just funny. Do you not know what variables used in prediction are? I asked you to tell me the variables the ESRI used in their forecast of growth, and how they are reckless, in your words. I didn’t ask you for their previous forecast figures.

Predictions for GNP and GDP are not an exact science, as nesf pointed out above

It don't take an expert to realise that it does depend. Every 10,000 drop in the number of houses built means that GDP declines by 1%.
That is disturbing for a so called non-dependent economy on construction. No other Western economy(maybe bar Spain) is so dependent for its GDP on the amount of houses being built.

You already said the ESRI focused on housing and how very dependent the Irish economy is on construction, but now you can’t point to that?

Do you know what Irish GDP even is or what it’s based on?

Where did you get 9.4%?(this based on construction ONLY which i'm not talking about)...Finfacts are liars?
Remember, i'm not talking solely about construction, i'm talking about construction and and its related activity in banking(mortgaging, estate agents, insurance and the likes) and retail(furniture stores, hardware stores for example)

Can you not do basic arithmetic? 14064000/151078000 = 9.3% which is actually lower than I said.

151,078,000 = Irish GNP in 2007 and 14,068,000 is construction & building.

You focused on housing, then jumped to overall construction. You never mentioned banking and retail.

This downturn is time delayed. It takes maybe average 18 months to finish a house.
Peak demand of housing was in mid '06, hence most of that demand is finally being built and the new demand has been slashed since then hence layoffs in construction,finance and retail

Mid 2006 + 18 months = January/Febuary 2008. And how much has unemployment increased since then? Do I need to post that again?

Again, you need to look at industries based on construction(banking and retail) where a construction downturn hurts the most.

Again, post some figures. You’re still dribbling on.

No, i do not. There are far too many employed there(from memory, was it one in five men work in construction related activity?)

At the moment, its been trimmed to sustainable levels. FAS themselves have stated that 80,000 jobs there are at risk and thats just based solely on construction itself, nevermind banking and retail.

That post was in reference to Blindjustice, hence why his quote was above it.

The rise in unemployment has only started. It ain't no coincidence that the majority of new claimants are men, now how is that?

Ahh how could I be so silly. Clearly every male in the country works in construction. How could I be so short sighted? Of course, none of them can leave the country to find new work, nor could any retrain, why thinking like that would be insane.

No, have you?...Have i touched a nerve ??

Look at their forecasting beyond rose-tinted glasses

Again that was in reference to Blindjustice. I know you don’t work for the ESRI, cleaning their toilets could be a possibility for you, though, given your grasp of arithmetic, grammar and (armchair) economics.

gurramok

UCD_Econ wrote: »

You already said the ESRI focused on housing and how very dependent the Irish economy is on construction, but now you can’t point to that?

See below report.

UCD_Econ wrote: »

Do you know what Irish GDP even is or what it’s based on?

Most of it is based on MNC's at a time of severe dollar weakness, thats scary.

UCD_Econ wrote: »

Can you not do basic arithmetic? 14064000/151078000 = 9.3% which is actually lower than I said.
151,078,000 = Irish GNP in 2007 and 14,068,000 is construction & building.

Thats what i thought you were referring to(construction only figure in CSO stat). One can't focus on one industry and ignore other industries which are dependent on that industry.

UCD_Econ wrote: »

Mid 2006 + 18 months = January/Febuary 2008. And how much has unemployment increased since then? Do I need to post that again?

It's only started, it will get worse as the year goes on, related to that time delay thing i had explained.

UCD_Econ wrote: »

Again, post some figures. You’re still dribbling on.

Here, have a read by DKM independent consultants of the review of the economy: http://www.environ.ie/en/PublicationsDocuments/FileDownLoad,15353,en.pdf.

Its based on figures from the Dept of the Environment. Thats where the 22% of GNP figure dependent on construction related activity comes from.

UCD_Econ wrote: »

Ahh how could I be so silly. Clearly every male in the country works in construction. How could I be so short sighted? Of course, none of them can leave the country to find new work, nor could any retrain, why thinking like that would be insane.

You said that, i never did. I suggested around one in five, i'll dig up the precise figure when i get time.
EDIT: Here's one link http://www.rte.ie/news/features/webchat/george_lee.html . George Lee had stated it, is he wrong?

UCD_Econ wrote: »

Again that was in reference to Blindjustice. I know you don’t work for the ESRI, cleaning their toilets could be a possibility for you, though, given your grasp of arithmetic, grammar and (armchair) economics.

Personal attacks are very childish.

nesf wrote:

Eh, which part of economic forecasting is an inexact science don't you appreciate? Their estimates are best guesses based on economic theory and assumptions clearly laid out in their reports. The forecasts are inexact precisely because forecasting a single headline number like GDP/GNP growth requires forecasting a plethora of out figures from what that headline
is calculated. Any forecast of GDP/GNP figures is only as good as the underlying forecasts and that's where the debate really is if you know how to read these things.

That you're even talking about just the GNP number underlines that you don't grasp what's actually the point of this whole thing is nor the logic that underlays the prediction of these numbers.

GDP is not real national income. Strip out the MNC's profits and you get GNP which is a truer picture on what people earn.
Again, assumptions like a US recovery in 2010 in the report is like forecasting lotto numbers.

nesf

gurramok wrote: »

Again, assumptions like a US recovery in 2010 in the report is like forecasting lotto numbers.

And you are basing this statement on..

gurramok

nesf wrote: »

And you are basing this statement on..

As no-one knows, not even the US themselves.

What makes the ESRI know more about the US economy than the US themselves?

nesf

gurramok wrote: »

As no-one knows, not even the US themselves.

What makes the ESRI know more about the US economy than the US themselves?

No one knows who is going to win horse races, soccer matches and GAA matches but the bookies still make a profit..

European Central Bank President Jean-Claude Trichet has warned that the end of the credit crunch is not yet in sight. He also told BBC radio the world was experiencing an 'ongoing and very significant market correction'.

http://www.rte.ie/business/2008/0519/ecb.html

So how insulated is Ireland from this world wide credit crunch?

If we accept that Ireland is going through a property crash, (definitions of which are hard to find? Anyone have a definition?), then according to this paper:
http://www.ucd.ie/economics/staff/mkelly/papers/solvency.pdf

by Professor Morgan Kelly Irish banks will suffer their own credit crunch independent of the world:

The large exposure of Irish banks to property speculators does not mean of course that
large losses are inevitable. What it does mean is that, if a crash occurs, or even if already
nervous overseas bond markets cut off liquidity to Irish banks (foreign banks have over
€400 billion on deposit with Irish banks, and hold another €200 billion of bonds), it will be
very costly to fix, dwarfing the bailout of AIB in the 1980s.

nesf

Deleted User wrote: »

http://www.rte.ie/business/2008/0519/ecb.html

So how insulated is Ireland from this world wide credit crunch?

You need to put Trichet in context. He isn't scaremongering here, he's trying to signal clearly to the markets what ECB is thinking, as from that what actions they can expect so as to calm them and keep them from getting jumpy. Setting interest rates is only part of what a central bank can do to keep things going steady. Manipulating expectations and sentiment is another of their tools.

I never said he was scaremongering?!
You say he is trying to send a clear signal. What do you think this signal is?
A rate rise? And that he is giving a kind of advance warning so they know what to expect?
Can you elaborate/clarify your post? As Im just guessing at what you mean here

nesf

Deleted User wrote: »

I never said he was scaremongering?!

I wasn't trying to imply you were. I was trying to get at how his talk sounds a lot worse when taken out of context.

Deleted User wrote: »

You say he is trying to send a clear signal. What do you think this signal is?
A rate rise? And that he is giving a kind of advance warning so they know what to expect?
Can you elaborate/clarify your post? As Im just guessing at what you mean here

Trichet is basically saying, "There will be no rate cut next time around". It's hedged, and a rate cut could happen if something very unexpected occurs but generally his language since last Autumn has been repeating that mantra over and over again in different ways. When he talks about how worried he is about inflation, he's basically saying that he doesn't want to cut rates. A rate rise on the other hand could be viewed as unlikely considering the eurodollar levels at the moment and the impact that it would have on European exports to the States.

Essentially, the ECB tries to avoid shocking the markets because confusion is generally not a good thing in the markets. The present Euro/Dollar exchange rate is priced according to the chance of a rate cut, rates staying the same and a rate rise (ignoring all other factors to keep things simple). If the markets, and businesses, feel that the ECB won't spring any surprises on them with rate changes then this gives people a better idea of what the exchange rate will be which gives businesses a better idea of what exporting to the US will be like etc.

nesf

nesf wrote: »

I wasn't trying to imply you were. I was trying to get at how his talk sounds a lot worse when taken out of context.

This is getting complicated now
hehe Im not saying you were saying I was scaremongering lol

nesf

Deleted User wrote: »

This is getting complicated now

It is complicated, that's what makes it so interesting. It's the problem with armchair economics. It's no different to me predicting how rugby games will go, I watch rugby and follow it to an extent but I've no real technical depth in my knowledge about it and really my predictions for games would be hunches at best. If I chat about rugby with one of my friends who is really into it, the lack of depth in my knowledge quickly becomes very apparent.

Économiste Monétaire

Morgan Kelly was, as he put it, "just spouting off". He didn't actually have an solid data to base his opinion on so you should take him with a pinch of salt , but he has done a paper on the boom and bust in Japan due to a property market crash which is worth a read.


Gurramok: A few points

See below report.

I said to show me where in the ESRI report not a separate report. You based your statements on the recent ESRI report and how the forecasts were 'reckless'.

Most of it is based on MNC's at a time of severe dollar weakness, thats scary.

Wait, did you just say that at a time of "severe dollar weakness" it was a bad time for MNCs? Repatriation of profits at a time of high Euro/Dollar rates. Think about that for a second.

Strong currency is not the equivalent to a strong economy and vice versa. Pick up an elementary economics book, seriously.

Also, I doubt you could quantify just how much of GDP is attributable to MNCs.

Thats what i thought you were referring to(construction only figure in CSO stat). One can't focus on one industry and ignore other industries which are dependent on that industry.

Trying to quantify just how much directly and indirectly is an estimate and not reliable figures. You cannot say definitely that a loss of X number of houses leads to X drop in GDP. You are against estimations (from the ESRI & general forecasts) so to accept them here is hypocritical.

DKM figures are based on estimates for 2007. I'll stick to CSO final numbers for 07.

You said that, i never did. I suggested around one in five, i'll dig up the precise figure when i get time.

It's only started, it will get worse as the year goes on, related to that time delay thing i had explained.

The figures are not supporting you. You tried to explain your 'time delay' hypothesis but after 18 months the figures aren't supporting you. End of.

GDP is not real national income. Strip out the MNC's profits and you get GNP which is a truer picture on what people earn.

Now see this shows glaringly that you've never even opened a basic economic theory book. GNP is GDP +/- net factor incomes from abroad, not just striping away MNC profits. GDP and GNP are not the be all and end all of people's economic well being.

As for being childish, I'm not the one claiming conspiracy theories about an Economic research institute.

Ekancone

gurramok wrote: »

Re:daithifleming
Yes, the credit crunch is affecting Ireland. Why?...Just look at the Euribor rates which Irish banks depend on getting money when they are not getting it from customer deposits.
Euribor rates have shot up since the credit crunch hit and that why the likes of new tracker mortgages have been either withdrawn or have their rates raised.
Coupled with Irish developers owe Irish banks €100bn, we have a huge domestic problem in banking as its so dependent on construction related activity.
The US had widespread mortgage fraud in its banking system and thats why a recession might be happening there.(i'm not fully convinced a fully blown recession will bite there, they are no so dependent on construction related activity like us)
We have not have had widespread mortgage fraud other than dodgy 100% mortgages being issued which is not on a similar scale to over there.

Its the domestic issues which i highlighted above which is driving the recession here.

I will get to this eventually, Im just in the middle of my final exams so I dont have time to do the research required to flatten this once and for all.

gurramok

UCD_Econ wrote: »

I said to show me where in the ESRI report not a separate report. You based your statements on the recent ESRI report and how the forecasts were 'reckless'.

The separate report reports what has happened to the economy in 2006 plus it has a forecast after that.
I do disregard that forecast just like the ESRI one as i'm giving you facts and not figures from the future.
Its the part on past performance is where to get real figures and thats whats important.

UCD_Econ wrote: »

Wait, did you just say that at a time of "severe dollar weakness" it was a bad time for MNCs? Repatriation of profits at a time of high Euro/Dollar rates. Think about that for a second.

Thats a good point, lets hope the cost of operating here does not overshadow their decisions.(I work in a MNC so it affects me)

UCD_Econ wrote: »

Strong currency is not the equivalent to a strong economy and vice versa.

Yes, a weaker currency encourages exports. It's the purchasing power of the average worker using a weaker currency is where it hits in the pocket imho.

UCD_Econ wrote: »

Also, I doubt you could quantify just how much of GDP is attributable to MNCs.

RTE among many commentators seem to think it affects it alot.

rte wrote:

The difference is made up of net factor flows, which in reality includes net profit repatriation by multinationals and interest on the foreign component of the national debt. In Ireland's case, GDP is significantly larger than GNP because of the large US multinational presence here

I sincerely doubt that there are more inflows than outflows here, there are not many Irish businesses abroad in comparison to the huge foreign corporations based here who repatriate their profits abroad.

Hence the difference between GDP and GNP numbers as described.

UCD_Econ wrote: »

Trying to quantify just how much directly and indirectly is an estimate and not reliable figures. You cannot say definitely that a loss of X number of houses leads to X drop in GDP. You are against estimations (from the ESRI & general forecasts) so to accept them here is hypocritical.

I base this(X number of houses in relation to GDP) on what has been reported in the media(they might be wrong but they cannot be all wrong?..If they are wrong, what is the correct figure?)

UCD_Econ wrote: »

DKM figures are based on estimates for 2007. I'll stick to CSO final numbers for 07.

Nope, read the summary of 2006 in review. Its in the first couple of pages, it states clearly that over 22%(24 to be precise) of GNP had been sourced from construction related activity.

UCD_Econ wrote: »

The figures are not supporting you. You tried to explain your 'time delay' hypothesis but after 18 months the figures aren't supporting you. End of.

Nope, not end of.

The April stabilisation was due to the timing of Easter in March, the CSO supports this fact. http://www.cso.ie/releasespublications/documents/labour_market/current/lreg.pdf

There was an underlying increase of 5,000 in April. http://www.businessworld.ie/livenews.htm?a=2143081

Lets see what May and June etc bring.

UCD_Econ wrote: »

GNP is GDP +/- net factor incomes from abroad, not just striping away MNC profits. GDP and GNP are not the be all and end all of people's economic well being.

Then, can you show figures of how much the MNC's affect the well being of the economy?

daithifleming wrote:

I will get to this eventually, Im just in the middle of my final exams so I dont have time to do the research required to flatten this once and for all.

Good luck, hope you pass

Économiste Monétaire

This is my last post about this because you really aren’t getting anything I’m saying and your lack of fundamental economic knowledge is beyond funny and is becoming frustrating.

The separate report reports what has happened to the economy in 2006 plus it has a forecast after that.

But you said this in your first post about the ESRI:

That article is based by a govt funded think tank is based on alot of farcical assumptions NS, especially the part about 48,000 houses, bloody hell, a sustainable economy should not be depended on the amount of houses built!!

I asked you to show me where (label them) in the report there are farcical assumptions (also to substantiate those claims) and where in the report it states your comment about how Ireland is dependent on construction. If you make a claim about a document, you should have at least read it and not just from RTE.

Have you ever attempted to infer the growth rate of an economy from mounds of data? How could you have any sane reason to say that the assumptions and variables used in the prediction figures are either reckless or farcical.

I do disregard that forecast just like the ESRI one as i'm giving you facts and not figures from the future.

You haven’t given any facts, just your opinion; please do not confuse fact from fiction. Figures from the future? They’re called forecasts. They’re dependent (as the mod said) on assumptions prevailing at the time they’re written.

Its the part on past performance is where to get real figures and thats whats important.

So basically what you’re trying to say is that an economy is static and all we need to do is look to the past because nothing ever changes, technology remains still, shocks to demand and supply never happen. Right…

Yes, a weaker currency encourages exports.

It does indeed. But a weak currency doesn’t mean that an economy is strong or not.

It's the purchasing power of the average worker using a weaker currency is where it hits in the pocket imho.

The purchasing power of an Irish worker is not reduced by a depreciation in the Euro value, a reduction in purchasing power in any fiat currency comes from inflation. The only way you could consider an appreciation of the Euro a reduction in purchasing power is through purchasing imports.

You seem to like listening to RTE a lot so just think back to the most recent coverage of any pay talks. Now, did they take into account the current Euro/Dollar exchange rate or the inflation rate when discussing future wages? Rhetorical question by the way.

RTE among many commentators seem to think it affects it alot.

I never said it didn’t matter, I said you couldn’t quantify (I.E: % of GDP) your claim that most of GDP depends on MNCs.

I sincerely doubt that there are more inflows than outflows here, there are not many Irish businesses abroad in comparison to the huge foreign corporations based here who repatriate their profits abroad.

Ugh, GDP is dependent on quantity of goods and prevailing market prices (or factor cost). When you give figures in nominal value reductions could be attributable to either a reduction in output (I.E: A recessionary gap) or a fall in prices. When you’re talking about GNP, you need to take into account factors occurring in other countries, not just our own.

It’s the factors underlying the figures you’re oblivious to.

I base this(X number of houses in relation to GDP) on what has been reported in the media

That’s just a bad idea. As you’ve observed RTE focused on the small section of the ESRI report that mentioned (barely) housing. They focus on what Joe Newbie can understand, not technical details. The figures, as I already stated, are estimates and not fact so don’t treat them in that way.

Nope, not end of.

I don’t know how many different ways I can explain this but I’ll give it another shot:

Your hypothesis: There is a time delay in unemployment, that being 18 months. The peak in housing happened around mid 2006 (June/ July)

The figures so far have been an increase from 5% in January to 5.5% in April, I’m not just talking about March to April. The doomsday scenario you were describing (considering the amount of people you said will be affected) hasn’t happened. Now I will say that the unemployment rate we’re both discussing isn’t perfect and I’m not going to say it definitely won’t happen, but so far the figures aren’t indicating in your favour.

Then, can you show figures of how much the MNC's affect the well being of the economy?

I don’t think you understood what I was saying. GDP and GNP figures and not perfect indicators of economic well being for the following reasons:

a) Leisure time is not priced in markets and therefore not reflected in GDP. Extra leisure time, like that of the 40 hour week, is a major benefit of living in a wealthy society. The increase in leisure time is due to a lower opportunity cost of leisure time and increased purchasing power of average worker’s wages.

b) Non-market economic activities such as housekeeping services and volunteer work, with a few exceptions such as government services, are omitted from GDP. The fact that these unpaid services are left out of GDP does not mean that they are unimportant.The problem is that, because there are no market prices and quantities for unpaid services, estimating their market values is very difficult.

c) Environmental quality and resource depletion are factors such as a decline in air and water from expanding a manufacturing base. Increased pollution certainly detracts from the quality of life, but because air and water are not bought and sold in markets, GDP does not reflect this downside of economic growth. The exploitation of finite natural resources also tends to be overlooked in GDP. When an oil company pumps and sells a barrel of oil, GDP increases by the value of the oil. But the fact that there is one fewer barrel of oil in the ground, waiting to be pumped sometime in the future, is not reflected in GDP. Putting a value on pollution is difficult since it often involves placing a euro value on intangibles.

d) Quality of life such as spacious, well constructed homes, good restaurants and stores, a variety of entertainment and high quality schools are reflected in GDP. However other indicators of the good life are not sold in markets such as low crime rates and minimal traffic congestion.

e) Poverty and economic inequality, GDP measures the total quantity of goods and services produced and sold in an economy, but it conveys no information about who gets to enjoy those goods and services. Two countries may have identical GDPs but differ radically in the distribution of economic welfare across the population. People’s economic satisfaction depends not only on their absolute economic position (the quantity and quality of food, clothing and shelter they have) but on what they have compared with what others have. Because GDP focuses on total production rather than on the distribution of output, it does not capture the effects of inequality.

oh my god that post you sound like a politician trying to talk around an issue
and your odd few condescending comments here and there throughout the thread sound like something from politics.ie are you a party hack or something? You dont add anything to this by doing that. No need to get wound up and "frustrated" its only the internet!

nesf

Deleted User wrote: »

http://www.rte.ie/business/2008/0519/ecb.html

So how insulated is Ireland from this world wide credit crunch?

More analysis of Trichet's comments for you: http://www.ft.com/cms/s/0/6d31d124-258a-11dd-b510-000077b07658.html

nesf

Deleted User wrote: »

oh my god that post you sound like a politician trying to talk around an issue

I've been thinking about this and I think it mainly stems from a misunderstanding about what the answers should look like rather than anyone being evasive necessarily.

A "simple" example:

Question: Do we have an oversupply of houses?

The answer you or gurramock are looking for here is a yes or a no with some gesture towards some data, but that's not the kind of answer you'd get out of UCD_Econ or myself. The question itself, in this instance, is actually flawed in my view. The first issue with it is, houses aren't homogeneous products like screws, nuts or bolts. The question "Do we have an oversupply of 3 inch nails?" is quite simply answered by going out and simply counting how many of them we have. A 3 inch nail is a 3 inch nail for the most part. You might get some difference in the type of metal used but for the purposes of economic analysis on a national level, it doesn't really matter all that much.

Now houses on the other hand are very different to that. There's no such thing as a standard house really. Each individual house and most importantly its value and/or utility is based on a number of factors such as size, location, quality of building materials, aesthetics etc. There isn't even a definitive list of these qualities really and it's open to debate what we should and should not measure in order to get an idea of the value of a house in monetary terms or in terms of how valuable it would be to a person buying it. This issue makes simple raw numbers, like the total amount of houses built this year or last year, not very informative in reality. 50 houses built in D4 are very different in value terms to 50 otherwise identical houses built in the middle of nowhere on the Kenmare peninsula. Looking at raw housing numbers doesn't tell us very much. So discussing oversupply in terms of raw numbers of homes built isn't a very good question and is hard to answer meaningfully, which if you are serious about answering questions, is a big problem.

A second point: the value attributed to houses, even when we know for definite what factors matter changes over time. Here the problem is exogenous factors (i.e. factors determined outside our system, in this case factors determined independently of the houses). Oil prices are a topical and relevant example since we're discussing a report talking about house building over the next decade or more. As oil becomes more and more expensive, driving long distances to work will become a luxury rather than the norm and heating homes, and electricity usage will similarly be affected (lets ignore all other effects, like food price inflation due to increased transportation costs for the moment). The result of increased expense here is that the value accorded to location today might be completely different to the value it might get 10 years from now because of increased private transportation costs making other factors, like easy access to public transport more attractive/valuable. The heating/power side of things would increase the value of well insulated and efficient homes, i.e. newer ones. This could boost housing builds, even in a completely "full" housing market where no extra houses need to be built, where people buy old houses, knock them and build nice new efficient homes in their place because the savings on running costs makes it worth doing. Other examples you could talk about are changing tastes and trends, the move from 80's bungalows to 90's 3/4 bedroom semi-detached etc. The point to take from this paragraph is, even when we know what to measure, the measures can change over time. Since houses are long lived, long term things, this is rather important. Versus say a Mars Bar, which while very different in value now than 20 years ago, won't exactly be likely to be around still 20 years from now, so we can just take its present day value as being pretty meaningful for some questions.


I'm only discussing two possible factors here, i.e. a) the heterogeneous quality of houses making discussions of housing supply in raw number terms relatively meaningless and b) the fallacy of attributing fixed values to individual houses due to the sensitivity to external shocks meaning that the whole concept of a homogeneous stock of houses is even more meaningless when looked at over the long term where certain key economic conditions will change. I'm not a specialist on the housing market or housing bubbles. A specialist would probably raise even more issues with the question. Part of the issue when addressing economic topics and science in general is that forming the question correctly can be even more important than how you answer it. The popular media approach of taking broad questions, like oversupply, and attempting to give short and snappy answers that anyone can understand is not a rigorous approach to the subject. Their goal, after all, is viewer/reader numbers, not the search for "objective truth". Your average person in this country would be bored to tears by my opinions on these things to be fair. They don't want a long drawn out and analytic answer.



The thing is, it's very easy to misinterpret me dismissing the question of "oversupply" as being poorly defined as being an attempt to wriggle out of an uncomfortable topic, a la a politician, rather than the actual cause which is genuine belief in it being poorly defined and/or answers to it not carrying much meaning or predictive power.

If you aren't asking good economic questions, there's no way for me or most other people on this forum to give you anyway decent economic answers. Since this is the Economics forum, we tend to try and give these kinds of answers rather than off the cuff opinions that we might give in a different setting, for instance.

SkepticOne

UCD_Econ wrote: »

No one truly knows the answer to your question OP, you have to look at the indicators and make up your own mind. If you want to look at the data about growth, the current projections for growth in real GDP for 2008 is 2.3% (which is above the 1.7% forcasted growth rate for the euro area) and is supposed to pick up to 3.2% in 2009.

For unemployment the CSO has the Seasonally Adjusted Standarised Unemployment Rate at 5.5% for April, an increase from 5% in January. So unemployment is increasing but keep in mind we're better than the EU average of 7.1% in 07.

Should projections or forecasts be regarded as data or indicators here?

Also, in discussing the future prospects of the Irish economy how is the fact that unemployment is relatively low by EU standards relevant. It is great that the figure is currently low but it does not tell us about the future at all.

Why is rising unemployment being downplayed? Surely this is the thing that needs explaining. This is the one piece of actual data that has some relevance to the question posed by the OP.

nesf

SkepticOne wrote: »

Why is rising unemployment being downplayed?

One reason is that a side effect of full employment is upwards pressure on wages. Unemployment going from 5% to 5.5% isn't as big a deal as it going from 7% to 7.5% partially for this reason (assuming that rising wages are undercutting competitiveness in the economy etc which could be argued for Ireland in some ways). A steady rise over time or a very sharp rise quickly are something that really need to be ringing alarm bells. A .5% increase when the economy was at or very near full employment, with a correction happening in the housing market which was booming isn't very worrying, yet. One would expect it to rise a bit, the question is where it goes from here. It's whether this will develop into a trend or not is the big question and a very hard one to answer accurately right now. It's really too early to say either way, it's been a slow decrease so far, though I'd be sceptical enough about the accuracy of the figures myself.

Économiste Monétaire

SkepticOne wrote: »

Should projections or forecasts be regarded as data or indicators here?

They're indicators. The figures of the indicators are based on data.

Also, in discussing the future prospects of the Irish economy how is the fact that unemployment is relatively low by EU standards relevant. It is great that the figure is currently low but it does not tell us about the future at all.

The OP asked:

ntlbell wrote: »

For the layman like myself is there much good happening in the economy at the moment?

So my answer about unemployment was relevant to now. When the new quarterly household survey comes out then the figures for unemployment will be more accurate.

Why is rising unemployment being downplayed? Surely this is the thing that needs explaining. This is the one piece of actual data that has some relevance to the question posed by the OP.

Unemployment figures will never be zero due to frictional and structural unemployment. People are always trying to get jobs more specific and closely tied to their skills.

Nesf said it pretty well:

It's whether this will develop into a trend or not is the big question and a very hard one to answer accurately right now.

Also, are you asking why was I downplaying the unemployment rate? It's because cyclical unemployment is what is relevant to recessions and to any dooms-day type theories about mass unemployment from the housing industry.

SkepticOne

With regard to the ESRI projections, it is great that they have a model that predicts healthy economic growth into the future based on actual data but it is not data in itself but a prediction based on a particular model.

UCD_Econ wrote: »

Also, are you asking why was I downplaying the unemployment rate?

No, I felt you are downplaying the rising unemployment not the current rate of unemployment which, as you say, is still low by EU standards.

But how does currently low unemployment mitigate against rising unemployment? To illustrate my point: Britain had a boom in the late 1980's and in the early 90's they had a recession. The fact that they had low unemployment during the boom did not in any way stop them from subsequently having a recession and rising unemployment later.

We have had a boom and low unemployment. I don't believe this, in itself, tells us much about the future direction of the economy (but I am open to correction).

Économiste Monétaire

SkepticOne wrote: »

No, I felt you are downplaying the rising unemployment not the current rate of unemployment which, as you say, is still low by EU standards.

Because the rising unemployment from January wasn't large enough to be considered as cyclical unemployment. You can wait for the figures from the QHS to come out and make up your own mind.

But how does currently low unemployment mitigate against rising unemployment?

It's the severity of the rise. Not all unemployment is consistent with a recession.

Britain had a boom in the late 1980's and in the early 90's they had a recession. The fact that they had low unemployment during the boom did not in any way stop them from subsequently having a recession and rising unemployment later.

That's the business cycle, c'est la vie . All booms come to an end because 8+ percentage growth rates (in our case) aren't sustainable. The recession you're talking about occured because of the ERM/George Soros/Speculative attack on the British pound on Black Wednesday.

We have had a boom and low unemployment. I don't believe this, in itself, tells us much about the future direction of the economy (but I am open to correction).

You're right it doesn't tell us much. I don't think anyone said that because we have had a boom we will not have a recession. I don't quite get what you're trying to ask.