In all my posts, I have always focused my attention on positive news coming from the market beginning with the rise in the real estate sector ending with Google’s quarter results. My analyses were always critical about the approach too optimistic of transmitting the news and the way of giving a too positive economical scenario to the readers.
Today I will discuss about the GDP result published on Friday by the Office of National Statistics in London, showing that the economy is not recovering at all, on the contrary the Gross domestic product “contracted by 0.4 percent from July through September from the previous three months, and it shrank by 5.2 percent from a year earlier”.
In the past days the majority of the analysts were predicting a positive figure for the UK economy and as a consequence all newspapers were publicizing with enthusiasm the optimistic forecast; on Friday they communicated the results with surprise and shock.
The International Herald Tribune is stating a clear title and summary of what is going to discuss, giving the reader, even before reading the article, a broad understanding of the facts. It is basing its judgment on a comparison between the Euro land and the UK showing the different economy results over the past three months.
The first part is explanatory of the figures and forecast; the following paragraphs, through the chief European economist at Standard & Poor’s, try to underline the causes of this bad GDP outcome, citing consumer indebtedness as the main factor undermining a recovery in Britain:
“U.K. consumers are coming out of a period of very significant leveraging, and the process of unwinding that is long and painful”.
A simple question come to my attention at this point: why the prediction was based “on recent improvements in housing statistics, purchasing managers’ indexes and the wilting pound” and not on the consumer indebtedness?
The approach used by Bloomberg is completely different, is not just communicate the news, but it is also gathering the causes in different sectors of the UK’s economy.
The all article is based on different interviews with both analyst and politicians, in common they have the shock and the surprise of this unpleasant result: from an economist at Citigroup Inc. saying that “The surprise is across everything,” to the chief economist at the Chartered Institute of Personnel and Development stating “This is desperately disappointing news, especially given that it was hoped that a modest recovery had begun … The U.K. economy is continuing to shrink, with six quarters of contraction in output making this recession look more like a depression.”
Bloomberg is attracting potential readers by dramatizing the news, mostly of the people interviewed, prefer to express their shock instead of communicate their point of view on the fact and their possible solution.
The Telegraph is transmitting astonishment for the bad results; it is critical with the prime minister saying that “The news is a major blow to Gordon Brown…” and it communicating to the readers that “Britain looks increasingly likely to be the only major economy not to have emerged from recession by the end of September”. It is admitting that the rise in the house prices and the profits of City institution “had buoyed hopes that the worst was over” but the figures are really disappointing and the crisis is going to be longer than it was expected.
It is a simple article, well-written, clear ideas with a critical analysis of what it is happening, examining different aspects of the news.
In conclusion the prediction was wrong and based on wrong sources even though the Bank of England warned earlier this month that the strength of a rebound remains 'highly uncertain' and I cannot find an explanation of why everything is astonished about the result.
We have faced and we are partially still facing the biggest financial crisis of the modern era with complicated consequences and implications.
The crisis for the financial sector is over and it has moved in the industry and service sector that are struggling in order to overcome this period; after recovering these sectors it will be finished or “who will be the next?”
The Telegraph:
Bloomberg:
http://www.bloomberg.com/apps/news?pid=20601068&sid=aA4yuANivXCQ
International Herald Tribune:
http://www.nytimes.com/2009/10/24/business/global/24euro.html?em
Very good - I like you conclusion. 7.5/10
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