So where is this recession then? We should be knee deep in it by now, says RACHEL RICKARD STRAUS: Smile… it really may never happen

By Rachel Rickard Straus, Financial Mail On Sunday

Published: 21:53 BST, 8 April 2023 | Updated: 21:53 BST, 8 April 2023

So where is this recession then? We should be knee deep in it by now if the Bank of England’s predictions last year had been correct.

But the economy is still growing. The Office for National Statistics even revised its data last week to show the economy was stronger at the end of last year than previously thought.

And what about the house price crash? Late last year, property experts were predicting prices would drop by 5, 10 or even 20 per cent this year. Rising interest rates would force homeowners to sell up, resulting in prices tumbling down, we were told.

But prices rose for a third consecutive month in March, according to a report by Halifax on Thursday. In fact, the bank said they increased in every region of the UK.

And where are the great swathes of job losses? Unemployment is supposed to be rising, brought on by the recession, according to an Office for Budget Responsibility report late last year. But the unemployment rate was unchanged at 3.7 per cent in the quarter to January, the latest official figures show. And there were still more than a million unfilled jobs.

Where is the recession?: We should be knee deep in it by now if the Bank of England's predictions last year had been correct

Where is the recession?: We should be knee deep in it by now if the Bank of England’s predictions last year had been correct

And aren’t we supposed to be in the midst of a major new banking crisis by now? When two US banks – Silicon Valley Bank and Signature Bank – went under last month, economists were falling over themselves to predict the contagion would spread. It did – as far as Credit Suisse.

Some bank share prices are still in the doldrums. But so far, we’ve hardly witnessed the Armageddon many were warning us about.

I’m not trying to go all Pollyanna on you here. I know that our economy is facing huge challenges.

A strained NHS, a striking workforce, households battling against the ever higher cost of living, the growing need to green our economy. Millions of individuals are facing very difficult circumstances.

All of the issues above may still play out – we’re by no means out of the woods yet.

But it’s the Easter Bank Holiday weekend, it’s starting to feel more like spring and I hope you’re enjoying a lovely weekend.

So just for a moment please humour me, and allow me to step back and enjoy the fact that things may not be as bad as they might have been – and certainly not as catastrophic as predicted.

I’m not surprised that forecasts appear to be overly gloomy. Predicting what will happen in the economy is a flawed business. So much is determined by human behaviour – whether we feel confident and are spending, hiring and investing, or scared and battening down the hatches.

And we humans are a fickle bunch and often don’t act as economists might expect.

It’s particularly easy to forecast that things will be worse than they turn out to be.

Cast your mind back to the moments where the economy took an unexpected turn. I bet the things that come to mind are major, awful events, such as the pandemic or the war in Ukraine.

But it’s far harder to look back and remember the things that didn’t derail us – the crashes and crises that never happened.

When predicting the future, it’s easy to assume there will be more of the same negative events and conditions ahead. So when the International Monetary Fund predicted last week that global economic growth this year would be the slowest seen since 1990, you’ll forgive me for taking it with a pinch of salt.

What does this mean for any of us and how we manage our own finances? Well, I think it serves as a reminder that we cannot live our lives by economic forecasts.

It may be tempting to put off buying a home because prices are predicted to fall.

Warnings about rising unemployment may make it more appealing to stick with a job we don’t like.

Investors may choose to keep their cash out of the stock market in anticipation of a market fall.

All these things could still happen. But what if they don’t? I’d think twice before putting your life on hold off the back of some headlines and expert forecasts.

The sun is shining, the tulips are about to bloom – things could be worse.

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