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Ten reasons to feel positive about the Australian economy
Topic Started: 11 Sep 2015, 06:37 PM (4,571 Views)
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Ten reasons to feel positive about the Australian economy

September 11, 2015, Jessica Irvine

Visiting US economist Paul Krugman this week warned of the dreaded "R" word. Former Reserve Bank board member Warwick McKibbin put the odds at 50:50 that we'll be in recession in the coming year.

But now that the dust has settled, and with a bit more time to digest the literally hundreds of data points that make up the report, the chief economist of Commonwealth Bank, Michael Blythe, has penned an excellent note to clients laying out the case for being positive about the Australian economy.

His reasons for optimism can be roughly distilled into 10 main points:

1. We're already near the bottom of the mining boom cliff

Yes, commodity prices have tumbled, meaning we earn less for our mineral exports. And yes, mining companies have tightened their purse strings and stopped investing in new projects. But the collapse in spending on mining exploration in the June quarter means we're much closer to hitting rock bottom (pun intended). It's unlikely such a weak number will be repeated next quarter.

2. Storerooms are empty

When measuring economic output, the Bureau of Statistics also takes into account whether companies are stockpiling or running down inventory. The national accounts reveal that the inventory to sales ratio is at a record low. "Future sales will need to be met by lifting production", says Blythe, which bodes well for future economic growth.

3. A home renovation boom is on its way

One consequence of sky high property prices is that the cost of moving is growing more quickly than the cost of staying put. Spending on home renovations is finally picking up after a period of weak growth. Renovations make up about 40 per cent of total residential construction activity and will help to offset any slowdown in new home construction.

4. Workers are getting pay cuts, not the sack

5. We're becoming more internationally competitive

6. The job market is holding up pretty well

7. Households have amassed a war chest of savings

8. We're spending less overseas

9. You can't control the weather

10. Growth will probably be revised up anyway

Read more: http://www.smh.com.au/business/the-economy/10-reasons-to-feel-positive-about-the-australian-economy-20150910-gjjp22.html
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deluded
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This is a joke piece right?
Real Trump News -- Real Climate Science News -- Real Democrat Party News
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Terry
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Wasn't sure if that was a pis take or not. Given the notoriety of Sept 11, that could be perceived as being in poor taste.

The home renovation boom looks promising.
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Shadow
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Which of the ten items is wrong?
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Will
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Terry
11 Sep 2015, 07:05 PM
Wasn't sure if that was a pis take or not. Given the notoriety of Sept 11, that could be perceived as being in poor taste.

The home renovation boom looks promising.
Certainly in Brisbane, a home renovation boom is definitely happening. Seems to be quite large scale renos everywhere, as well a a heap of apartment constructions. Traders seem to be back to naming their price.
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noopsy05
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Shadow
11 Sep 2015, 07:06 PM
Which of the ten items is wrong?
lol, I second this question and would love to know?
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The Whole Truth
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deluded
11 Sep 2015, 07:03 PM
This is a joke piece right?
That's what I thought. I looked hard for a single point that was good and the only possible one was the bullshit one about a home renovation boom. That if it is actually occuring would contribute fuckall anyway, and could end at the drop of a hat.

Waste of time clicking on the thread. I'll leave it the likes of shadow who revel in debating obvious lies.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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Shadow
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The Whole Truth
11 Sep 2015, 08:01 PM
I'll leave it the likes of shadow who revel in debating obvious lies.
Which of the ten points were lies?
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Loki
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noopsy05
11 Sep 2015, 07:23 PM
lol, I second this question and would love to know?
1. We're already near the bottom of the mining boom cliff

Ahhh ... that would be a no. Barring some miraculous turn around in China, the central government is targeting a 20% deflation of the yuan by the end of 2016. Most commodities are still over supplied with falling demand.

2. Storerooms are empty

When measuring economic output, the Bureau of Statistics also takes into account whether companies are stockpiling or running down inventory. The national accounts reveal that the inventory to sales ratio is at a record low. "Future sales will need to be met by lifting production", says Blythe, which bodes well for future economic growth.


China already has plenty of productive capacity. We don't make enough domestically to feel a positive effect from inventory building. With any luck Chinese factories will lower their prices enough to offset the drop in the dollar. :tu:

3. A home renovation boom is on its way

One consequence of sky high property prices is that the cost of moving is growing more quickly than the cost of staying put. Spending on home renovations is finally picking up after a period of weak growth. Renovations make up about 40 per cent of total residential construction activity and will help to offset any slowdown in new home construction.
Possible but unlikely. Sydney and Melbourne are getting close to a tipping point of oversupply. When we get there, prices will either correct sharply or stagnate. People don't tend to renovate in a flat or falling market. So there may be 6-9 months of reno activity, but I wouldn't rely on it.

4. Workers are getting pay cuts, not the sack
Not sure if anyone ever felt positive about getting a pay cut ... maybe in the strange bizzaro world of property bulls ... especially if they are leveraged to the gills.

5. We're becoming more internationally competitive
No. We. Are. Not. This is just a flat out lie.

6. The job market is holding up pretty well
Okay .... I guess.

7. Households have amassed a war chest of savings
Citation needed.

8. We're spending less overseas
Less holidays! I'm sure everyone feels positive about that!

9. You can't control the weather
Well, you can't. But people can. Have done, and still do.

10. Growth will probably be revised up anyway
Numbers are always more important than reality, so that's something to be positive about.
Edited by Loki, 11 Sep 2015, 08:15 PM.


“Talk sense to a fool and he calls you foolish.” - Euripides
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createdby
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That article is stupid. The woman is stupid.
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