The wellbeing of the average man or woman on the Mile End Road omnibus – their thoughts, feelings, worries and anxieties – currently suggests an incoming recession in the UK and is the very best indicator around, according to noted economist David ‘Danny’ Blanchflower.
In a major speech at Queen Mary University of London, Professor Blanchflower predicted that a UK recession will follow hard on the heels of the one he’s forecasting for the US at the end of the year.
The very latest consumer confidence data in the US is clear that worry and anxiety levels are increasing in people. Professor Blanchflower stressed that these indicators also have predictive power - with current wellbeing levels a huge cause for concern.
Professor Blanchflower said: “This sort of data could predict all of the last six recessions in the United States that macroeconomists missed. People are hurting after the COVID shock. And they know when bad times are here and coming.
“And this sort of analysis gives us an edge over more traditional models – helping to predict downturns up to a year in advance.”
Declines in these data in 2007 gave early warning of the recession that was coming in the UK in 2008. The concern now is that happiness is much lower in the UK than it was before the pandemic. Professor Blanchflower also lamented that Brexit has meant the UK no longer has access to key predictive EU data, such as that from the EU business and consumer survey, which he described as “the best data around” when it comes to predicting economic falls.
Professor Blanchflower, a Queen Mary alumnus, was giving his talk ‘The Wellbeing of the Man or Woman on the Mile End Omnibus’ at the annual Peston lecture, held in honour of economist Lord Maurice Peston, founder of the Department of Economics and Finance at Queen Mary. Lord Peston's son the broadcaster Robert Peston, called the lecture 'magnificent'.
He is currently the Bruce V. Rauner Professor of Economics at Dartmouth College, and was previously an external member of the Bank of England's interest rate-setting Monetary Policy Committee.
About the Peston Lecture
The annual Peston Lecture series honours the memory of Professor the Lord Maurice Peston, who founded the Economics Department (now the School of Economics and Finance) at Queen Mary and served as its first Head. In recognition of Lord Peston’s own combination of scholarly achievement and public service, the Peston Lectures focus on the interface of economics and public policy. Previous speakers include Mark Carney, David Currie, Charles Goodhart, Richard Lipsey, Robert Peston, Martin Weale, and Silvana Tenreyro.
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