There are, according to Benjamin Disraeli, three kinds of lies: “lies, damned lies and statistics”. Yet popular opinion treats the release of every item of economic data, often rushed out prematurely and prone to multiple subsequent revisions, with a reverence that no serious economist would condone. Economic statistics are then routinely weaponised for political ends, a task made easier by the frequent contradictions between different sets of data.
The most fundamental of economic statistics is the measurement of national economic output, generally referred to as GDP (Gross domestic product), and its rate of change. But, as Professor Diane Coyle of Cambridge University points out, “economists have been cheerfully downloading GDP and other national accounts figures without giving much thought to the statistical niceties”. She suggests that GDP data increasingly provides a “Grossly distorted picture”.
In mid-February, for instance, the BBC reported that “in 2018, the UK economy expanded at its slowest annual rate in six years after a sharp contraction in December”. This was based on Office for National Statistics (ONS) data that measured annual growth at 1.4%, down from 1.8% in 2017. Cue media angst about Brexit, stagnating productivity and structural weaknesses in the UK economy. In the past, such slow growth would have been accompanied by rising unemployment and a rising government budget deficit.
Subscribers can read it in the digital edition or app