Britain's economic boom

The UK economy is booming. Today's figures show that real GDP grew by an annualized 15.9% in Q4. Consumer spending grew 21.6%, capital spending by 20%, and exports by 10.2%.
Yeah, I know the official figures (pdf) show that GDP grew just 0.6%, 2.4% annualized. But those are after seasonal adjustment.  I've quoted the unadjusted figures*.
Unadjusted figures show that GDP always rises strongly in Q4 (though Q4 2005 was the strongest since 1999) and slumps in Q1.
I think this matters:
1. It corroborates Robert Lucas's view that the welfare costs of economic fluctuations - at least to the average person - are tiny (pdf). For each of the last 31 years, the economy has boomed in Q3 and Q4, and slumped in Q1. The meeja and policy-makers don't much notice. let alone care. If seasonally unadjusted recessions - the ones real people actually experience - don't matter, how can seasonally adjusted  ones be so important?
2. Seasonal fluctations can cause longer-term fluctuations. This paper (pdf) reckons they can explain half of US post-war business cycles.
3. Economic volatility around the turn of the year might explain the stock market does so well in winter - investors need good returns to compensate them for economic risks.
* Table A2 in the UK Economic Accounts, available here for the brave.

Comments

[Jim]

"If seasonally unadjusted recessions - the ones real people actually experience - don't matter, how can seasonally adjusted ones be so important?"

I would imagine it's because recessions that show up only in the unadjusted figures are necessarily short-term so don't lead to job losses, which is the main way people 'experience' recessions.

[chris]

it's not as obvious as that, Jim, because employment's seasonal too. Private sector employment (code CZG8 in NS's time series database) usually falls in Q1, having risen in Q2 and Q4.
What's more, even when aggregate non-seasonal employment is stable or rising, there are tens of thousands of job losses. Real people face insecurity even in good times. Recessions only worsen the odds a little.
The problem isn't recession - it's that workers face inadequate insurance markets and have insufficient background assets, which mean job loss is painful, whatever the macroeconomic state.
When Brown prates about macroeconomic stability, he's missing the point.