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120
Economic growth and the Real Price of Oil
12
Real Price of Oil
End of Iranian
hostage crisis
Iranian
100 revolution
OPEC cuts
production
World economic
growth
10
Average growth
rate in real GDP,
1970-2004: 3.7%
80
8
OPEC
cartel
collapses
60
20
Stagflation
R
E
C
E
S
S
I
O
n
6
Start of second
war in Iraq
4
Growth
Boom
R
E
C
E
S
S
I
O
n
2
Forecast
Growth
Percent %
Constant US$
per barrel
40
Invasion
of Kuwait
75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: International Monetary Fund
The US Household Savings Ratio, 1960-2004, % of income
12
12 month moving average
10
8
1960-2000 average
6
4
1990-2000 average
2
2000-2004 average
0
-2
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 05 06 07 08
Source: Ian Hanwood, Dresdner Kleinwort Wasserstein
USA Real M4 Growth - Annual % Change
USA Gross Domestic Product - Average Estimate Annual % Change
USA Volume of Retail Sales - Annual % Change
FEDERAL RESERVE DISCOUNT RATE
12
11
10
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
8
6.5
5.5
91
6.0
6.5
7
12
5.5
3
40
3
3.5 4.75 5.0
90
5.0
4.5 4.75
67
6.0 2.0
3.5
1.5
(15) (20)
1.0
2.5
4.0
5.0
5.5
2.0 1.5
2.5
14
84 85 86 87 88 89 ’90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
% Change
in S&P 500
Saving ratio minus
pension contribution
Year on year
10pc
8pc
6pc
4pc
2pc
0pc
-2pc
-4pc
82
86
90
94
98
02
06
08
On Average no one is better off
6
wages
RPI
Exc.
Bonus
5
Per cent
4
3
2
1
0
Jan
2005
Apr
Jul
Oct
2006
Jan
Apr
Jul
2008
May
Apr
Aug
Fifty years of family spending
% of households expenditure on selected categories
35
Food
30
25
20
Housing
15
Leisure goods and services
10
Clothing & Footwear
Fuel & power
5
1957
1960
1965
1970
1975
1980
1985
1990
1995
2000
2006
UK Savings
Ratio
Saving ratio minus
pension contribution
Year on year
10pc
8pc
6pc
4pc
2pc
0pc
-2pc
-4pc
82
86
90
94
98
02
06
08
10
U.K. Real M4 Growth - Annual % Change *
U.K. Gross Domestic Product - Average Estimate Annual % Change
U.K. Volume of Retail Sales - Annual % Change
3 month INTEREST RATE
12
11
10
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
11
11
8
8
29
13
15
17
13.5 10
25
5.5
5.5
6.5
51
6
6.5 7.25 6.75 5.0
44
6
4.5 4.0 3.75 4.75 4.5
(36)
5.25 5.75 5.0
5.75 5.25
11 18
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
* Nominal M4 deflated by the RPI excluding mortgage interest payments
Quarterly periods when stocks were reduced
% change in FT
all share index
Germany M3 Money Annual % Share
Germany Gross Domestic Product - Average Estimate Annual % Change
Germany Volume of Retail Sales - Annual % Change
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
2.0 2.5 3.0 3.75 3.0 4.25 4
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
All figures inflation adjusted
*
Japan Real M4 Growth - Annual % Change
Japan Volume of Retail Sales - Annual % Change
Japan Gross Domestic Product - Average Estimate Annual % Change
INTEREST RATE
12
11
10
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
0.5 0.75 0.25 1.25 1.5 2.0 1.75 2.0 2.25 2.5
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Source: Independent Strategy
£250,000
UK Long term Real House Price Trend
£230,000
Actual
Trend
Base: Q2 2007
Trend at 2.7% per annum
£210,000
£190,000
£170,000
£150,000
£130,000
£110,000
£90,000
£70,000
RMF Forecast
Source: Nationwide Building Society
2023 Q1
2021 Q1
2019 Q1
2017 Q1
2015 Q1
2013 Q1
2011 Q1
2009 Q1
2007 Q1
2005 Q1
2003 Q1
2001 Q1
1999 Q1
1997 Q1
1995 Q1
1993 Q1
1991 Q1
1989 Q1
1987 Q1
1985 Q1
1983 Q1
1981 Q1
1979 Q1
£30,000
1977 Q1
£50,000
CHINA % Change year on year
Real M4 Proxy
Real GDP
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
93
94
95
96
97
98
99
2000
01
02
Real M4 Proxy is from IMF estimates. Treat with caution!
03
04
05
06
Source: IMF
07
08
09
The Distribution of Income by Household Type
(Urban Households only) in China
% Share of Urban Households by Income
100
90
80
70
Lower Middle Class
($3,000-$5,000)
Upper Middle Class
($5,000-$12,000)
Poor (<$3,000)
60
50
Mass Affluent
($12,000 - $24,000)
40
30
20
10
0
1985
1990
1995
2000
2005
2010
2015
2020
Actual Forecast
In 2003 there were 200m Urban Households with an average of 3 persons in each
2025
India Real M4 Growth - Annual % Change
India Gross National Product - Average Estimate Annual % Change
13
12
11
10
9
8
7
6
5
4
3
2
1
0
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05 06 07
BRAZIL % Change year on year
Retail Sales
Real GDP
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
-7
-8
-9
-10
-11
-12
-13
84
86
88
90
92
94
96
98
2000
02
04
06
08
Source Brazilian Central Bank: