It's quite striking how this recession has brought previously arcane areas of economics into the mainstream. While the great City bubble inflated, the general population's knowledge of economics was limited to some vague idea about demand and supply. I remember walking into the middle of a raging debate in my local chemists the day the new £20 note was launched. No one seemed to know who this Adam Smith bloke on the back was, and what he had ever done to merit his place there.

I suspect that most consumers still don't know much about Adam Smith, but many are happily debating the shape of this recession and the timing and speed of a likely recovery. Whether a recovery would be U, L, W, or double-dip used to be the stuff of econometrics conferences, not pub talk.

When the economy first began to stutter, the media was accused of talking the country into recession. While this was nonsense, there's no doubt that the sheer volume of media, from Sunday newspaper supplements to 24-hour rolling news channels, has meant plenty of time has been devoted to talk about the economy. But has turning us into a nation of economists really led to greater awareness? Do such regular pronouncements on the shape of a recession or recovery have any real value? And in an age of greater social fragmentation, might the value of macroeconomics in helping us really understand the world around us be somewhat diminished? A typical day at Director, sees us sent as many press releases announcing new luxury watches and special reserve whiskies as it does ones detailing research into how small businesses are struggling, or announcements of forced closures or administrations.

Macroeconomics is essential to understanding what's happening in the country and around the world. But are we in danger of becoming too concerned with the big picture and forgetting the details? This isn't one recession, but lots of individual or "hyperlocal" recessions. Just as overall statements of the state of the housing market mean little to someone trying to buy or sell a particular house in a particular street, so overall assumptions on the economy miss the more nuanced and fragmented picture.

Next week, German car firm Audi opens its new West London dealership to the public. This monster, seven-storey edifice on the site of the old Lucozade factory is expected to welcome some 30,000 visitors a year and will house up to 116 display cars. It cost Audi £45m to build and while it may have initially been conceived in 2002, the fact that Audi is happy to open it now speaks volumes.

The showroom's press launch, a celebrity-packed affair with a lavish dinner and champagne reception, also saw the launch of Audi's latest model—the £110,000 R8 Spyder. When the order book for this stunning convertible sports car opens later this month, it's likely that demand will outstrip supply. It certainly feels like odd recessionary behaviour. Meanwhile Ron Dennis, chairman of the McLaren Group, is about to start work on a new factory in Woking, also to turn out sports cars with price tags over £100,000.

This is not to downplay or belittle individuals and organisations that are suffering. As the latest unemployment figures show, lots of people have lost jobs and lots of people will be struggling to make ends meet as a result. Many people still in work, from the boardroom to the shop floor, will have experienced pay freezes or reductions. But with the latest inflation figures showing the consumer price index (CPI) at a record low and interest rates still hovering just above zero, the cost of living has dramatically reduced in the last year, making a pay freeze feel more like a small increase.

So, before we get too comfortable in our roles as armchair economists, it's worth noting that the real economy rarely matches up to pure economic models. For all the coverage they get, simplified versions of economists' models fall down when paired with reality. Economies are just too complicated and fragmented to simplify. Built on implicit assumptions that economists themselves understand and comprehend, their models fail to explain why some restaurants across the country will always be full, why some car showrooms will always be filled with customers rather than bored sales staff and why expensive new cars, watches and whiskies will continue to launch. 

Richard Cree

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