Saturday, August 25, 2012
The second estimate of British GDP was published yesterday. More interesting than the slight upward revision was that it unlike the most preliminary report contained income estimates for different sectors. And it shows that so far only capitalists are suffering from the recession, while worker's income continues to grow-for now. While nominal GDP rose by 1.9% in the year to the second quarter, compensation of employees rose 4.7% while "gross operating surplus" of corporations fell by 5.5%. Deflating these numbers with the 2.8% gain in the gross domestic purchases price index, gives us a drop of 0.9% real drop in GDP and a 8.1% real drop on gross operating surplus-but a 1.8% real gain in worker's income. This is in the short term good news for British workers, though a continued drop in profits (Note that because gross operating surplus doesn't exclude depreciation, net profits fell by a lot more than the gross surplus) will risk causing investments to fall, something that in turn in the long term wouldn't be good for workers.