When a growing economy still feels bad

David Cameron was right; the good news has kept on coming. This morning’s first estimate from the ONS puts GDP growth in the third quarter at 1.0 per cent. Cue much justified squabbling over what the ‘real’ number is. A significant portion of this growth will be a one-off, post-Jubilympics bounce-back, suggesting slower underlying growth. As Jonathan pointed out yesterday, ONS first estimates have a margin of error of 0.7 percentage points, meaning that even with these factors built in, the real figure could lie between 0.3 and 1.7 per cent. Gaps of this magnitude are no small matter.

But behind these arguments about the number itself lies a different and in many ways much more politically important question: what will a return to growth actually feel like? The answer depends on a lot of things: what frame of reference do people use when judging how well off they feel? Do people feel mired in debt? Most simply, though, it depends on how growth feeds through into people’s incomes.