The data deluge

Afternoon all,

Some good news this week – the economy growing…just. Though we should probably worry less about dipping just below/above zero in the past three months, when a five-year fall in GDP *per capita* has spelled disaster for living standards. That said, tipping above or below zero (for fiscal rules) must feel pretty important in the Treasury right now…

For some reason this week I was also reminded of this research on women needing higher qualifications than men for similar roles (sadly it’s not free to access).

Chart of the Week highlights the divergent costs and experiences different ethnic groups face in housing (based on this report). And while next week is half-term (so no Top of the Charts), but the ONS number crunchers will still be keeping everyone busy, as Something for the Weekend sets out.

Happy Valentine’s day – turns out Bridget Jones was an absolute tear-jerker. Have a great weekend,

Ruth

Chief Executive
Resolution Foundation

R&D in the red. Growth is slowing and debt is growing. Gulp. This hasn’t happened in Advanced Economies for decades. What does it mean for future growth? (Rachel Reeves look away now). This paper finds increases in government debt coincide with a (persistent upwards of ten years) decline in growth, which is most pronounced in R&D-intensive industries. How does that decline come about? The authors theorise that it’s a combination of uncertainty and wavering consumer/investor confidence off the back of rising government debt (sound familiar?). The good news (Donald Trump look away now) is that more open financial systems can mitigate the negative effects.

Parity in Porsgrunn*. Not that I’m tired of hearing “Torsten used to”….but here’s one for my predecessor. Valorising Scandinavia as the epitome of widely shared prosperity is a long-treasured pastime. Here’s new analysis on how they’ve achieved that balance. The key appears to be predistribution, (not redistribution). Equality arrives in Scandinavia via a flatter distribution of pre-tax wages, not post-salary by tax and benefits. This has been achieved through a wage bargaining system with strong coordination within and across industries and unemployment insurance with a high replacement rate. This halves the pay premium for education and skills in the Nordic countries, compared to the UK and US. The authors find that high taxes and excellent childcare don’t generate equality to the same extent.

Lavish ‘leccy. Do US states with more renewable energy have more expensive electricity? This blog post compares state-by-state electricity prices in the US to see if states with more renewable energy have higher bills. The short answer is no, but they don’t necessarily have cheaper energy either. The same variation exists with non-renewable energy prices, suggesting other factors are at play. Determining and unlocking these factors is crucial to keeping prices down during the net zero transition. For more on how solar panels can reduce UK electricity bills, see our report released yesterday. We found savings are possible (even with British weather) – so it’s vital to install more solar panels in suitable households. The report says a mixture of grants and loans might be needed (hold on, didn’t someone change the fiscal rules to make loan schemes easier….?!?).

Rejigging jobs. What makes people decide to move jobs? This paper looks at German workers and finds it’s not just about awareness, but also the personal costs of switching jobs. Most expect pay differences, but for some the costs – which are equivalent to 7 to 18 per cent of annual pay even if location were to stay the same – outweigh the potential for a pay rise. The research suggests these costs include personal connections and aversion to change, which increase with age and tenure. Resolution Ventures (yes! We do social investment too) has been working on this – check out one of our investments Breakroom, a community-powered job ratings platform.

*Bonus points if anyone knows where this is without Googling.

Something for the Weekend? | Data deluge

Next week we’ll be getting some big updates from the ONS on the three Ps – pay (Tuesday’s labour market release), prices (inflation on Wednesday) and public finances (Friday).

While many will be hoping for continued falls in the rate of inflation (after welcome drops in key long-run indicators for the rate of price rises last month), that’s not what the Bank of England is forecasting. They’re expecting a chunky rise in January (from 2.5 per cent to 2.8 per cent) as airfares rebound, bus fares rise and VAT on private school fees all come into the calculation. And this isn’t the end of it – the Bank are forecasting inflation to peak at 3.7% in Q3. With benefits only due to be uprated by 1.7% in April (due to a low Sept inflation number to which benefits are pegged) this year is not looking good for living standards for lower-income families.

I’ll be watching those labour market statistics closely (despite clear issues with the underlying data). Jobs and vacancies have both been trending down – that’s a worry. Finally, this is the last set of public finances to make it into the OBR’s March forecast, and it’s the month with most self-assessment receipts in, so it matters.

Chart of the Week

*Another* key data set out next week is ONS house price indices. Expect headlines on London property prices, but look out for what’s happening to rents, which have been outpacing wages recently and hurting lower-income households in the process. This is a particular concern for ethnic minority households who are far less likely to own than their White British counterparts. Recent RF research found that tenure explains some, but by no means all, of a shocking housing affordability gap that these families face. As COTW (also available live in living colour) shows, Black Other and Arab households spend more than twice as much of their income on housing as White British households. This isn’t just a low-income issue either, better-off Indian and Chinese families also spend more. Not only do ethnic minority households pay more for housing, they get less in return too. A shocking one-in-five Pakistani and Black Other adults live in over-crowded homes, and despite spending over twice as much as White families in housing, one in ten Bangladeshi households live with damp. Given the scale of this housing injustice, we think an official inquiry is warranted into why ethnic minorities are at the sharp end of Britain’s housing crisis.