The retail sales figures were better this month. They confirm the feeling that the UK economy is now recovering at a faster pace. The forward indicators suggest we will experience reasonable growth again in the third quarter of 2013, with the service sector looking good.
It is true that many household budgets are squeezed. Labour wish to highlight this, but they should remember the worst of the squeeze occurred in 2008 and at the end of their period in government. Since then wage growth has been very subdued, whilst price rises have still been of concern.
It looks as if there will now be more confidence. Consumers have more confidence to buy things, probably because there is now less fear of losing your employment. Companies have more confidence, leading them to invest more and spend more on marketing and training. Homebuyers will have more confidence to buy a first home or trade up.
The industrial revival we also need still requires policies that promote cheaper energy. The recovery will be easier if more is done to mend the banks and to permit them to lend sensible extra amounts of money.
Mr Carney the new Governor of the Bank of England today needs to be careful. Issuing forward guidance is difficult, as it has to be credible and adaptable to changing conditions. He needs to avoid offering any nuanced or complex guidance which makes some people think low short term interest rates could end sooner rather than later, if he is to succeed with his aim of encouraging more spending and investment by reassuring spenders and borrowers that rates will stay down.