Review of the quarter's economic trends [May 1982]

This section of the Commentary provides an overview of the latest world and UK economic data. Clearly, the foundation for recovery in 1982 is a fragile one, for the prospects for the main expenditure aggregates are not promising: world trade is not expected to grow significantly and could even decline if the pressures for protectionism (arising mainly from high domestic unemployment) are translated into action. Real consumer expenditure is likely to remain relatively static since the growth rate of nominal disposable income is moving towards that of price inflation in most industrialised countries, and is even falling behind in some. High interest rates and company balance sheets still reeling from the effects of recession continue to depress investment prospects, and the continuing concern of governments with the size of public sector deficits makes any significant increase in autonomous
(as opposed to 'automatic' counter-cyclical) public expenditure improbable. These factors, coupled with their generally consistently over-optimistic forecasts for 1982 made a year ago, have made most forecasters much more cautious in predicting the extent of recovery later in 1982, and some are even suggesting that this recovery may not be sustained far into 1983.
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