Review of the quarter's economic trends [January 1979]

While demand management policies in the major industrialised countries are in a state of concerted divergence, and there are mildly favourable economic prospects for 1979 in all of these countries, there is a widespread feeling that this stability is unusually precarious and would easily be upset by political events. During the past three years, the United States economy has made substantial progress in terms of output and employment, while its balance of payments has deteriorated, and the rate of increase of consumer prices almost reached double figures in the middle of 1978, Over the same period, West Germany and Japan have enjoyed balance of payments surpluses and low rates of inflation, while their output and employment levels have grown relatively slowly. Now in 1979, it is claimed, this process will be reversed. In the UK, over the year just ended, GDP appears to have grown at a rate of 3-3½% (measured at 1975 prices). Growth
was especially rapid in the second and fourth quarters.