Those with short memories have forgotten that “green shoots” became notorious in the UK when Norman Lamont, then British chancellor of the exchequer, proclaimed the beginning of the end of the 1990-92 recession. Lord Lamont later argued that he was not all that wrong in the light of subsequent statistics. We need not enter this historical debate. The point is that his political opponents and many in the financial markets did not believe him and used “green shoots” as an ironic taunt. Yet the same people, or their successors, now talk about green shoots with a straight face, oblivious of historic connotations.
There are many reasons for not going to town on present talk. The clearest is the stock cycle which first magnifies and then damps the underlying output movement. Another is that much of the discussion emanates from the financial markets, especially equities and commodities. This is not to deny that stock market movements can initiate as well as signal changes in the wider economy. The problem is their inherent volatility. The US economist Paul Samuelson once remarked that Wall Street predicted eight of the last five recessions; the same might be said of recoveries.
World output cannot go on falling at turn-of-the-year rates without the international economy winding down. Jean-Claude Trichet, president of the European Central Bank, has said that output is now falling “at a decreasing rate”. It is highly likely that we will have before long a quarter or two of stable output – probably first in the US and last in the eurozone, with the UK in between. The interesting question is where we go from there.