While Friday's GDP data were dismal, talk of the UK economy entering a depression is likely to prove premature. However, Gordon Brown's pledge - made in a podcast one day later (Saturday 24 October 2009) that we can expect "to see Britain's economy return to growth by the end of the year" (external website) could prove equally risky.

A more balanced view (PDF format, 107.1K) (external website) was offered by Bank of England deputy governor Paul Tucker, speaking on the eve of the publication of the GDP estimates (Thursday 22 October 2009). Turner reviewed the progress of what he termed "the current financial and economic crisis," stating that "the stage where the most hideous macroeconomic nightmare - a second Great Depression revisited - is now probably remote."

But this should not be confused with an optimistic prognosis for the economy. Turner said that the Bank of England Monetary Policy Committee was now concerning itself with the question of whether "recovery will be anaemic or whether we can attain the above-trend growth needed to absorb the slack in the economy necessary to ameliorate downward pressures on inflation". According to Turner, the former scenario - which is a distinct possibility - is particularly worrisome. Turner said:

Anaemic demand growth would lead to inflation undershooting the target for a period. And it would be likely to see firms continuing to shed labour, scrapping capital and delaying new investment, adding to the hardships the crisis has already brought. But I fear, however, that we may not be much clearer about the general trends in demand until at least late spring/early summer next year.

This in part reflects the fact that these latest GDP figures are estimates, and that as these are subsequently revised, the UK economy could yet be revealed to have returned to growth in the third quarter of 2009.

In a fascinating analysis of the shockwaves caused by the unexpectedly negative GDP data, the Financial Times describes just how incomplete a picture these preliminary estimates paint (external website). It says that the Office for National Statistics' "preliminary data on gross domestic product are an attempt to provide an early snapshot of economic performance. The downside is that its coverage is limited, with this first estimate based on only 40% of the total hard data on output and nothing on spending or incomes."

The article continues gives an overview of the argument now raging among economic commentators as to just how pessimistic - or otherwise - we should be. It concludes:

The argument will not be resolved until 2012 or later, when the ONS publishes its final GDP figures for 2009 - fully reconciled between estimates of output, income and expenditure. Until then, complained Malcolm Barr of JP Morgan, "our ability to have a really good sense of whether we are getting a turning point is going to be really low".

So while the day after the publication of the latest GDP estimates saw the 80th anniversary of the Wall Street Crash (external website) (which took place on 24 October 1929, heralding the Great Depression), we do not necessarily need to worry ourselves just yet that history might be repeating itself.

It is too soon to write off those green shoots of economic recovery completely.