This morning's second quarter GDP figures have been greeted in the political blogsphere with a combination of shock and disbelief. The figures which, it should be emphasised, are an initial shot based on about 40% of the available data, showed the economy to have been contracted by 0.7% between April 1st and June 30th this year.
A contraction was expected but of the order of around 0.2% and there has been shock at the depth of the contraction which seems most pronounced in the Construction industry which retrenched over 5% in the last quarter. Now, some are using the Jubilee Holiday as an excuse but earlier retail sales had shown the long weekend had no impact either way on economic activity.
When bad news comes along and you don't like it you have two options - shoot the messenger or shoot the message. George Osborne's fall from Conservative grace has been especially meteoric and this rounds off a dreadful four months for the Chancellor. Everything unravelled when he tried to take the political decision to scrap the 50p tax rate and "encouraged" business and the anti-Coalition Conservative media to believe it was a done deal. The problem was he could not convince David Cameron of the wisdom of the policy and from then on everything has gone wrong. Most British Governments fail because the relationship between Prime Minister and Chancellor fails when the two are political rivals. Osborne may still be the heir apparent but his stock has fallen sharply.
He will probably survive - his demotion or move to the Foreign Office (with William Hague, who has been an ineffective Foreign Secretary coming to the Treasury) is still possible.
The other prevalent view today has been to dismiss the figures - some are claiming the economic recovery is going well, the shops are full (are people buying and are they full on Monday afternoons or just at the weekends?) and there are more people in work than ever before. This last statistic is perhaps the most interesting and the most misleading.
Unemployment has not been a big feature of this recession unlike the early 1980s when it reached 3.25 million. Indeed, recent figures have shown a slight fall so what is happening? The public sector is shedding staff and, apparently, the private sector is creating lots of jobs but what kind of jobs, where and what rates of pay? Do we need more people serving at McDonald's or stacking shelves at Tesco's? It may also be that as has been shown in the US, people unable to find work have taken themselves off the claimant list and are lost to the workforce.
It's a complicated picture and I wouldn't be surprised to see the figures revised upward in time but with the Eurozone mired in problems and evidence that the US is close to recession, it seems improbable that we will see strong economic growth for the rest of this year.
Supporters of the Coalition must be hoping this is as bad as it gets but problems in Spain might yet cause even greater instability through the next few weeks.
I'm reminded that the mid to late summer is a historically bad time for Europe. This time ninety-eight weeks ago, the European powers were on the brink of war. I don't think the summer of 2012 will be remembered as akin to the summer of 1914 - at least I hope not - but there seems plenty more rough water to encounter in the next few weeks.