Making sense of OECD’s new ‘interim’ assessment
With its customary fence-sitting and misplaced political correctness in times of trouble, the OECD (Organisation for Economic Co-operation and Development, all of 33 members strong now) has released its ‘Interim Assessment’ of the economic outlook for OECD countries.
The material and pontifical tone is attributed to Pier Carlo Padoan, OECD Chief Economist and Deputy Secretary-General, whose opening salvo is enough to put you off interim assessments for the rest of the year: “Recent high-frequency indicators point to a slowdown in the pace of recovery of the world economy that is somewhat more pronounced than previously anticipated. Against this background and according to the OECD short-term forecasting models, growth could slow in the G7 economies to an annualised rate of about 1.5% in the second half of the year. There is nevertheless great uncertainty in the outlook arising from a combination of weaknesses and strengths.”
Shorn of the absurd caution with which tenure economists of the neo-classical persuasion litter their pronouncements, here is what the esteemed Mr Padoan has said: households are becoming broke, the recession has had a lot to do with their becoming broke, there are not enough jobs for the members of these households, the jobs that they do have are by no means secure, and that’s why they’re being very very careful with spending.
The “interim assessment” put it differently in what purports to be Anglais: “Private consumption growth may be constrained by additional adjustments by households to the balance-sheet losses suffered during the recession and in response to housing market developments, should house prices weaken further. In addition, uncertainty about unemployment could put a damper on the expansion of private consumption. A weak economy and uncertainty in sovereign debt markets might also affect adversely the financial system and private demand gowth through deleterious feedback mechanisms.”
Losses, deleterious, uncertainty, unemployment, damper, weak, debt – these are the keywords. You’ll get the hang of it.