Didn’t I tell you so?
Ah yes, we see that the latest UK inflation has finally fallen to 4%. It does appear the WTGU (We The Great Unwashed) are now having an impact. And there is more to come! Suddenly economists have woken up to the fact that finally the WTGU can have an impact on the economy. Moreover if the rate of inflation has fallen, in spite of external inflationary effects (which have by no means diminished), then there is surely enough behavioural evidence that we are in a downward spending spiral.
Individual anxiety about the future has been present for many months. Somehow the discrete individual elements have been overlooked, until finally, and here we have a wonderful opportunity to mix metaphors, the straw that broke the camels back has finally been noticed or, the tsunami wave of the combined responses of the WTGU has broken on our economy.
As Stephanie Flanders mentioned in her latest report :
“With households so squeezed, it’s been a puzzle how firms could pass on all these input price increases month after month. Taken alongside the bad news coming from retailers, today’s figures might, just might, suggest that consumers are starting to say no. ”
Flander’s reference to consumers “starting to say no” I suspect, is an understatement, and that WTGU have been “saying no” for much longer. This has been ignored by mainstream economists who have lost touch with the behavioural response of the WTGU for some considerable time. The momentum created by WTGU is most likely to continue as there is little to encourage them to say “yes”.
Until “expert” economists understand the behavioural motivations which govern WTGU then they will fail to forecast with any credibility how the economic future will pan out.