It may look strong, but retail sales are weak, productivity is poor, growth modest and the labour market is hardly racing aheadThe evidence from the world’s biggest economy looks conclusive. Americans filing new jobless claims fell to 255,000 last week – the lowest figure since Richard Nixon was president during the final few months of the post-second world war boom 42 years ago.Fewer claims for unemployment benefit means the labour market is running hot, which in turn means the economy is overheating, which in turn means the Federal Reserve made a strategic blunder when it confounded Wall Street by declining to raise rates in September. Simple, right? Continue reading...

A reduction in full-time jobs of 13,900 was only partly offset by a rise in part-time jobs while the fear of mortgage rate rises also hangs over the CoalitionA fall in the number of people employed and the prospect of banks raising mortgage rates will put to the test the nation’s renewed confidence since Malcolm Turnbull became prime minister.

Chancellor seeks to exploit party’s disarray over economic policy following budget surplus U-turn by shadow chancellor John McDonnellGeorge Osborne has moved to exploit Labour’s disarray on economic policy by urging its MPs to vote for government’s fiscal responsibility charter, and so reject the shadow chancellor’s last-minute U-turn.John McDonnell gave a series of explanations for his volte-face on the Treasury charter, which commits the government to produce budget surpluses at times of economic growth, and which he had said as recently as two weeks ago he would support. His reasons ranged from a meeting with redundant steelworkers in Redcar to a downturn in the world economy. Continue reading...

George Osborne’s fiscal charter is a silly game. John McDonnell is right to vote against it. But it’s a shame he couldn’t resist a little game-playing of his own before he made the decisionAs ridiculous as John McDonnell’s economic policy may appear in the wake of his about-turn on George Osborne’s fiscal charter, and it certainly looks pretty shambolic, it is important to acknowledge just how ridiculous is the proposal that the shadow chancellor is wrestling with. Mr Osborne wishes to enshrine a wrong-headed symbol in statute, for no purpose beyond creating havoc on the Labour benches. He promises surpluses for ever using the law, but nobody will be going to jail when they don’t arrive.Even if the economy hummed to the point where the government was in the black, does anybody seriously imagine that Conservative MPs would sit passively for years on end when tax rates were higher than they needed to be? Does anybody dispute the arithmetic which demonstrates that a 2% GDP deficit will eventually result in a perfectly manageable public debt ratio of 40% GDP, just so long as nominal national income can be persuaded to grow at around 5% annually, as it generally did before Mr Osborne was in charge? Does anybody contest, either, that there are productivity-boosting investments which it is worth a government borrowing for, or indeed that the great lesson of the last few years is that it is important for the economic authorities to retain discretion to deal with nasty unknown unknowns? Continue reading...

Rolling coverage of all the day’s political developments as they happen, including reaction to Labour’s U-turn over the charter for fiscal responsibility5.21pm BST5.00pm BSTLabour’s deputy leader, Tom Watson, has been invited to appear before the Home Affairs Select Committee on October 21st.Labour dep. leader Tom Watson invited to give evidence to Commons Home Affairs Committee re his sex abuse allegations against Leon Brittan4.51pm BSTIn some, er, lighter news – Liberal Democrat blogger Stephen Tall has paid a heavy price for betting on the BBC’s Daily Politics show in 2013 that he’d “run naked down Whitehall” if his party was reduced to just 24 MPs in the election.This is what happens, kids, if you make a daft pledge on TV. You've been warned. http://t.co/r5SWfRmCCT pic.twitter.com/LYn5ob33StThis guy in Whitehall lost bet during election over number Lib Dem MPs would be left - he lost! .@Daily_Politics pic.twitter.com/lpVhQPsGD74.15pm BSTMPs have been debating the government’s immigration bill in the commons this afternoon. The bill would make renting out accommodation to illegal immigrants a criminal offence. Labour has tabled a wrecking amendment to the bill, with shadow home secretary Andy Burnham warning that it could lead to the modern equivalent of the “no dogs, no blacks, no Irish” signs. Here are some key points so far –4.01pm BSTFrom the Daily Mail’s deputy political editor –Did Michael Gove brief Jeremy Corbyn on Saudi deal to help bounce David Cameron into u-turn? Some Tory MPs think so...3.02pm BSTThe Scottish Labour leader, Kezia Dugdale, has been speaking to the BBC, denying that she urged McDonnell to change his position on the fiscal charter.I didn’t warn anyone off. I did speak to Jeremy Corbyn and his team over the weekend about the need to demonstrate that the Labour Party is the only anti-austerity party in the UK, so it is a good move.2.24pm BSTThis is an interesting tweet from the BBC’s political editor –All sorts of reasons why McDonnell U turn on budget surplus not a laughing matter, including that Corbyn himself had no idea it was coming2.17pm BSTJohn McDonnell has been speaking to broadcasters this lunchtime, explaining his decision to oppose the government’s fiscal charter."I've changed my mind on the parliamentary tactics" says John McDonnell of Labour's U-turn on fiscal policy https://t.co/O8DjMHnlOlI have changed my mind, but I haven’t changed my mind on the principles of what the charter is standing for which is we need to tackle the deficit and we will tackle the deficit. Labour will tackle the deficit – we are not deficit deniers, I haven’t change my mind on that.But I have changed my mind on the parliamentary tactics. Originally what I said to people was look that charter is a political stunt, it’s a political trap by George Osborne, it is virtually meaningless – he ignores it himself time and time again, he never meets his targets. So [I said], this is just a stunt and let’s ridicule it in the debate and vote for it because it’s a meaningless vote.2.12pm BSTThe Guardian’s home affairs editor Alan Travis has this analysis of the decision to scrap the Saudi prisons deal. The headline is: “Michael Gove emerges as human rights hero over bid to scrap Saudi prisons deal”. Here’s an extract –Michael Gove, in his new role as justice secretary and lord chancellor, is rapidly turning into a highly unlikely hero of the liberal left.The credits had hardly finished rolling on Monday’s BBC Panorama, showcasing Gove’s summer study tour to Texas to see how they are cutting their burgeoning prison population, before fresh details of his cabinet battle over a Saudi prison contract emerged.2.05pm BSTThe debate is now over, but my colleague – who was in the chamber – said that Conservative MP Daniel Kawczynski was handed a note part-way through (from a whip telling him not to speak in the debate?) which he then slung to the ground shouting “disgraceful”.He is the former chair of the all-party parliamentary group on Saudi Arabia and has strongly-held views on critiques of the country’s human rights record. See below.1.54pm BSTConservative MP Peter Bone asks how the “difficult balancing act” between human rights and national interest works in practice.Gove says the UK engages with the Saudi government on every level. The balancing act is guided by Britain’s national interest and keeping British citizens safe, but also by promoting the values that the British hold.

Shadow chancellor attributes change of heart, fiercely criticised by his own MPs, to meeting Teesside steelworkers who were made redundant

Labour MP Chris Leslie tells BBC Radio 4’s Today programme that shadow chancellor John McDonnell must explain his U-turn on Labour’s support for government plans to force future administrations to keep a budget surplus. Leslie, McDonnell’s predecessor as shadow chancellor under Harriet Harman’s leadership of the party, says McDonnell is sending the wrong economic message to the public

Former shadow chancellor Chris Leslie says his successor needs to explain last-minute change after angry parliamentary party meeting

Imports were down for the 11th month in a row, according to official figures, but there are signs that demand for the country’s exports is picking upChina’s imports fell heavily in September, official figures said, keeping pressure on policymakers to do more to stave off a sharper economic slowdown.Although exports fell less than expected by 3.7% from the same period last year, the value of imports tumbled more than 20% to register the 11th straight month of falls.Related: The world economic order is collapsing and this time there seems no way out | Will HuttonRelated: Western economies are still too weak to cope with Fed rate rise, says China Continue reading...

Economists are applauding the decision to recognise Edinburgh-born microeconomist Angus Deaton for his analysis of consumption, poverty, and welfare.

Evidence is more abundant than ever in economics. But Osborne prefers to sweep the awkward facts awayThe first analysts of family budgets were Rev David Davies and Sir Frederick Morton Eden in the 18th century. Their purpose, the new economics Nobel laureate Angus Deaton notes in his book on household surveys and public policy, was to highlight working-class distress. These pioneers produced powerful pictures of penury but, grabbing at evidence wherever they found it, they were engaged in reportage rather than science.More systematic assessment of social trends had to await the evolution of statistical theory, the arrival of big, randomly sampled surveys, and finally computers to crunch the results. The combined effect has been to distil something solid from thin air. Economics remains the dismal science when it comes to prediction, but it has made strides in measuring the facts, and gauging the diverse ways in which they play out for different people. Deaton’s singular contribution has been to disentangle the economy-wide swings in spending and saving from the decisions and the circumstances that confront particular individuals. But there are obvious parallels with the work of Anthony Atkinson and the bestselling Thomas Piketty on inequalities in income and wealth, and indeed with the efforts of civil servants and thinktanks which can now calculate, with half-decent precision, the immediate winners and losers from any tax and benefit reforms. The availability and intelligent analysis of surveys of citizens has steadily allowed for conjecture to be displaced by arithmetic. Continue reading...

John McDonnell says Labour will now vote against charter requiring government to run budget surplus within three years during ‘normal times’John McDonnell, the shadow chancellor, has made a last minute U-turn by announcing that Labour will vote against the government’s charter of fiscal responsibility on Wednesday.He told the Guardian in an interview during the weekend of the Labour conference that the party would back the fiscal rules despite Jeremy Corbyn having been elected as leader on an anti-austerity ticket. McDonnell said he was committed to balancing the books even though he did not agree with many of the charter’s specific objectives. Continue reading...