25 april 2012, the dreaded double dip

People get terribly hung up on definitions, and so it was today when the uk dipped back into "recession". In fact, whether or not the national economy has momentarily dipped below an arbitrary line or not is far less important than people's reaction to it, which is fanned by the near-hysterical reaction of a round-the-clock and all-pervasive mass media desperate for screaming headlines to send traffic to websites (15 august 2011). It is a vicious circle: recovery seeming further away means less hiring, more firing, less investment and less spending, all of which acts as a further break on economic activity, making recovery further away. I was on the radio talking about all this today (7 minutes in). It may yet last another quarter or two, given the above and the diamond jubilee, but the zig will zag back in due course, which will probably be the pattern for the uk economy for many years, hugging a narrow band close to zero growth, as we get through the great deleveraging (24 november 2011) that is as inevitable as it will be painful.