A leading thinktank says a recession is inevitable. At the same time a batch of economic data points to a recovery. What is going on?
A survey of services firms on Friday confirmed a revival in confidence and sales. On Wednesday, the Markit survey of manufacturers revealed a similar positive outlook. Construction on Thursday was more subdued, but nevertheless it all added up to a fillip for a chancellor.
As such, the figures would appear to support George Osborne's stance that all he needs to do is keep his hands in his pockets and the economy will grow by itself.
So what about the gloomy prognosis from the National Institute of Economic & Social Research (NIESR)? The mild recession it predicted in its latest forecast for the UK is based on a longer run of poor data that is fed into the thinktank's own model of the economy.
Several thinktanks have gone to the trouble of developing their own models. The Ernst & Young Item Club is another, and it includes all kinds of figures and surveys.
Bank lending is a key factor; the level of business investment is another. Weak lending by banks was a constant feature of the last year. Levels of investment have remain subdued since 2010.
Vicky Redwood, UK economist at Capital Economics, said the latest survey figures from Markit were an indication of rising expectations among businesses that the environment for selling their goods and services is going to improve, but they are deluded – or at least over-optimistic, Redwood believes.
Like many economists, she thinks the determination of the government to continue its austerity programme and the recession in the eurozone will drag the UK back down and continue a three-year depression.
Much the same can be said of the euphoria over recent unemployment and manufacturing data from the US. It looks like the US has extracted itself from the swamp currently dragging down Europe. A GDP growth rate last year of 1.8% easily outstrips most nations in the eurozone.
But there are many headwinds, some of which we have discussed before. And don't take unemployment data as a guide. The US figures exclude people out of work for more than a year, which was once a tiny number but now grows by the week.
Hopefully, the forecasters are wrong and are as overly gloomy in 2012 as they were stupendously optimistic in 2009.
However, the gloom-mongers appear to be on safer ground.
