Review of the quarter's economic trends [January 1980]

Most commentaries which are being written at this time take a markedly pessimistic view of the economic prospects for the non-communist world over the next twelve months, and beyond. This view, reflected in the unprecedented rise in the price of gold, arises from uncertainty about the willingness or the ability of the United States to maintain the political framework within which the non-communist world economy has operated since the second World War and the fear of continuing rises in the price of oil. The UK economy is in recession. All GDP measures suggest a fall between the second and third quarters of last year, with output data suggesting the decline was as severe as 2% of GDP. The alternative measures of GDP present somewhat different pictures. Expenditure data imply that GDP in the first three quarters of 1979 was only marginally above that of the first half of 1978; the output measure, by contrast, puts the growth rate a full 1% higher. In both cases growth was due almost wholly to increased North Sea oil and gas production. During 1979 as a whole, GDP may have increased by perhaps 1% with most of this growth occurring in the second quarter