Are We Being Deceived by Economic Data?

December 2024

Alan Dunne spoke with Paul Donovan Chief Economist, Global Wealth Management at UBS, about the global economic outlook.

Paul is known for cutting through jargon to make economics more accessible, and the discussion was thought-provoking.

Here are six out of consensus and interesting perspectives I took from the conversation.

1.    𝐏𝐞𝐬𝐬𝐢𝐦𝐢𝐬𝐦 𝐚𝐫𝐨𝐮𝐧𝐝 𝐄𝐮𝐫𝐨𝐩𝐞 𝐢𝐬 𝐎𝐯𝐞𝐫𝐛𝐥𝐨𝐰𝐧 – Budget challenges in France are no worse than those in the US.

2.    𝐆𝐃𝐏 𝐃𝐚𝐭𝐚 𝐢𝐬 𝐌𝐢𝐬𝐥𝐞𝐚𝐝𝐢𝐧𝐠  – Current measurements miss significant economic activities, like volunteering and TikTok content creation.

3.    𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐯𝐢𝐭𝐲 𝐆𝐫𝐨𝐰𝐭𝐡 𝐌𝐢𝐬𝐣𝐮𝐝𝐠𝐞𝐝– If GDP is mismeasured, productivity might be underestimated, meaning concerns about low productivity in places like the UK could be overstated.

4.    𝐓𝐫𝐮𝐦𝐩 2.0 𝐎𝐩𝐭𝐢𝐦𝐢𝐬𝐦 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧𝐞𝐝 – Expectations of stronger growth may be misplaced, with higher tariffs likely to weigh on 2025’s economic performance.

5.    𝐈𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧’𝐬 𝐓𝐡𝐫𝐞𝐞 𝐖𝐚𝐯𝐞𝐬 – Post-COVID inflation wasn’t singular but occurred in phases, with profit-led inflation a significant factor contributing to persistent price pressures, particularly in the retail sector.

6.   𝐑𝐞𝐩𝐮𝐛𝐥𝐢𝐜𝐚𝐧 𝐎𝐩𝐭𝐢𝐦𝐢𝐬𝐦 – Republicans are more emotional than Democrats, at least when it comes to economic surveys. Expect sentiment survey data to surge as the new administration comes in.