Indeed the clear implication was that we economists like to look on the negative side wherever possible; the dismal science argument once more.
Well, I have been studying carefully the recent economic data emerging for the UK and Scotland, and do accept that the long-awaited recovery is now truly under way and, crucially, there are signs of some re-balancing towards a pattern of growth that should be more sustainable.
But - and I am sure you were anticipating that word - there are three caveats to this more optimistic pronouncement. First, some of the data remain to be confirmed. And, like swallows, one piece of positive data does not promise summer ahead. Secondly, the re-balancing has some way to go and there remain risks related to undue reliance upon consumers, perhaps fuelled by house price expectations rather than rising real incomes. Thirdly, there are external risks in abundance. The eurozone lags the UK in the recovery stakes and the eurozone crisis in the periphery remains in place. Also, oil prices have shot up again and further uncertainties in the Middle East could induce another price hike impacting adversely on global growth. And then there is the economic enigma that is China, not to mention warning signs in India.
The key data for the UK over the past couple of weeks have been the second estimate of GDP for the second quarter of the year. The first bit of good news was that quarter on quarter growth was revised up a notch to 0.7%, very respectable and ahead of the US or the eurozone this time around. To add to the positive vibes this growth was much broader based than I had anticipated. In particular, it was pleasing to see exports up strongly and investment edging up. There were positive contributions to growth from private consumption, net trade, investment and even public consumption, despite the Chancellor's squeeze. One other notable feature was that employee wages were up nearly 2.5% on the quarter, after an extended period of decline in real wages. On the one hand that should help sustain consumption growth into the third quarter, but on the other that risks a pick-up in inflation and may hamper competitiveness and exports.
For medium term sustainability I look in particular at export and investment data. On the investment front we must note that the Bank of England agents still see their assessment of investment intentions pointing to only 'modest growth in capital spending'. My own anecdotal evidence tends to confirm this view. Businesses remain cautious and the constraint on investment is not any limitation on the supply of capital from banks and others but a paucity of demand from business until confidence really picks up. So the pattern we look for is confidence growing, followed by investment to enhance or improve productive capacity and innovate, followed in turn by increased competitiveness and growth in exports and domestic output. One key factor influencing confidence will be the state of overseas economies and their markets. For the eurozone the evidence is mixed - but that is actually an improvement! The economy of the zone as a whole grew in Q2 by a small but significant 0.3%, after 18 months (six quarters) of continued decline. That merits at least one cheer, probably one and a half.However, this was mainly due to strong performance in Germany and France; with Italy and Spain still in recession and the periphery problems as acute as ever. One further encouraging factor was that the latest composite Purchasing Managers Index (PMI) - for August - was at a two-year high, including some better figures for some peripheral economies. Maybe, just maybe, a more widespread - gentle - recovery could lie ahead.
In the US we are into a time of 'tapering'. In other words they are embarking upon a, presumably gradual, withdrawal of the quantitative easing that they started out upon before our Bank of England. They are set on withdrawing liquidity from the US economy because it is seen as strong enough to last without such extensive support. The life support machine is being slowly turned down. We must wait and see whether this causes deceleration - and certainly the equity and other markets will be twitchy for a while.
Finally one last piece of good news, for Scotland this time; an Ernst and Young survey shows Scotland in 2012 achieving its highest level of inward investment projects for a decade. London took 45% of the UK total but Scotland, along with Wales, Northern Ireland and the North East of England, attracted substantially more than their share proportionate to population. The continuation of Scottish Enterprise is seen as one reason for the positive performance. (Note of conflict of interest - I am on the SE board.) So maybe, Scotland is well placed, as and when recovery in the eurozone and elsewhere becomes firmer, to benefit from renewed investment growth. That is close to optimism for me. But do not forget those risks.
Jeremy Peat is director of The David Hume Institute