Junk Press Releases - and What GDP Is and Isn't

There's a thing called churnalism, and even a website that lets you see if a story is just churned, that consists of re-cyclying press releases and passing the result off as news. Almost everything you read about The Bank is churnalism - and what we the staff get to read is even less informative than the press releases. I don't know who does The Bank's PR, but she could get a job with Max Clifford keeping stuff hidden anytime. Anyway, on the Saturday after the Royal Wedding, the final straw just landed on my back.

The story was in the Daily Mail (it was on the table where I had breakfast) and was from an alleged professional services firm called RSM Tenon, to the effect that the two long weekends in April will cost the UK economy up to £6bn in GDP and up to £30bn in "lost productivity" - whatever that is (and it's a number so large it can only be related to turnover, not value-added or profits).

Which just proves that Messers Tenon and the others have no idea what GDP is. It's measured in two ways: expenditure and revenue. The two should balance - though not in a given period - and systematic differences are often taken as a measure of the size of the black economy if revenue is less than expenditure (and presumably cash flight if expenditure is less than revenue plus change in savings). The three components of revenue GDP are wages and salaries, corporate profits and a small fiddle-factor, excuse me, adjustment for notional incomes. When there's a public holiday, all full-time workers get paid anyway. Temps don't, but a lot of them are doing jobs that need doing on public holidays and carry on, so it's only those who are doing jobs that can be suspended for a day that miss a day's billing. But that money goes into the company's profits, so it has a net effect of zero. As for corporate profits, way more businesses are open for trading than you might imagine: what closes are their head and back offices, and that makes no difference to anything. The production is mostly offshored to places where the workers don't get days off for Royal Weddings, so that doesn't stop. As for the effect on sales, well, if you need to replace your washing machine (this is not autobiographical) you need to replace it and all that happens is that you order it on Tuesday 3rd May instead of Friday 29th April. It's deferred, not abandoned. This doesn't even effect GDP figures for the quarter, because both days are in the quarter. It all nets out at about zero.

This is basic first-year undergraduate economics (or if it isn't, it should be). A Business Editor should know it, just as they should know that any "story" about the "costs / benefits to industry" from the CBI or the NIESR is utter propaganda. (People don't get happier when they start earning more than the median salary (NIESR), and low-wage immigrants have contributed 0.5% of GDP over about four years (NIESR)? Well. Gee, who would have guessed the employer's tame "economists" would put out stories like that?) Twaddle like that should not be published. I am not going to speculate on the motives of an editor who puts trash like that on their pages.

That's it, I think. No more British newspapers. No more Today programme. As for the rest of the BBC - no. I'm not sure what I will use or read, but I will be giving it some thought.