Australian Recession Coming? Arteries of Australia’s economy are in trouble; RBA Statement on Monetary Policy - May 2012: Reserve Bank cuts growth and inflation forecasts
Tweet Topic Started: 4 May 2012, 11:36 AM (3,293 Views)
As I recall lending to commercial has increased over recent times in comparison to housing, but you can see that housing is nowhere near 90% of the total lending program.
ABS:
Quote:
4 Commercial finance is finance provided to individuals and corporations for business or investment purposes, including for the construction or purchase of dwellings for rental or resale. Fixed loans, revolving credit and commercial hire purchase are included.
Not really, commercial loans are written against residential security but the "PURPOSE" is for commercial or business use. In fact there are many residential home loans that are written where the purpose is actually for business or investment.
So the net percentage of loans for business use would be higher than the official stats indicate.
But if you wish to be pedantic, I think that I have offered more evidence to support my view than Bobby's handwaiving, or your own usual heavily biased efforts. I only had to prove my contention that Bobby's 90% was incorrect, which it clearly is.
If you looked at the total debts per sector then I would agree that banks have been overweight on residential, but it's nowhere near a 90/10 split. If you commence an OP with an obviously incorrect statistic and provide no links to prove it, what is the use of anyone reading further?
all this calculated using ABS income that is NOT comparable between 2002 and 2012 because as ABS claims income in 2012 is significantly overinflated compared to 2002
since 2002 average wages increased 51% (from 685 to 1033) during the same period house prices index increased 91% (from 74 to 141)
to go back to 2002 levels house prices have to fall "just" 21% more on top of the existing 7% fall
but not worry it will not take long this to happen and overshoot down to 1990s levels
While normal people are awaiting tomorrow night's federal budget to see if the measures Wayne Swan announces are naughty or nice, misguided souls in business and the financial markets are more interested in knowing Treasury's forecasts for the economy in 2012-13.
Well, wait no more. This year the key forecast for year-average growth in real gross domestic product in 2012-13 is the budget's worst kept secret.
It's taking the people who care about such things a long time to cotton on, but the Reserve Bank always upstages the budget forecasts by issuing its own forecasts as part of its quarterly statement on monetary policy on the Friday before the budget is unveiled on the second Tuesday in May.
This year the Reserve is forecasting year-average growth in 2012-13 of 3 to 3.5 per cent. This tells you Treasury's point forecast is likely to be at the mid-point of the range, 3.25 per cent.
And at a press conference on Friday Swan obliged by confirming that 3.25 per cent is indeed the budget forecast.
If you can't see why the Reserve's forecasts are such a reliable guide to Treasury's you understand neither the bureaucratic process nor the econocratic mind.
Although in theory the two outfits are free to each set their own forecast, in practice they caucus via the quarterly meetings of the joint economic forecasting group. And, in practice, it's rare for their forecasts for any indicator to be more than 0.25 percentage points apart - a difference which, in the highly imprecise world of forecasting, they dismiss as no more than a rounding error.
Just as politicians put their spin on developments, so the media put a spin on the news, preferring to focus on the negative. Thus it was reported that the Reserve ''downgraded'' its outlook for economic growth.
These cuts, we were told, ''underscore the challenges facing the Gillard government'' in returning the budget to surplus in 2012-13 - ''a task made harder by the slowing growth and the resulting weaker revenue streams''.
Don't you believe it. What rate of growth in 2012-13 was Treasury forecasting at the time of the midyear budget review last November? 3.25 per cent. What rate's it forecasting now? 3.25 per cent. That's harder?
It's certainly true the Reserve lowered many of its growth forecasts relative to those in its February statement. In general it cut each of its year-ended forecasts by 0.5 percentage points.
But note this: when it came to its year-average forecasts - those most relevant to the budgeting task - the one for 2012-13 was unchanged at
3 to 3.5 per cent and the one for 2013-14 was unchanged at 3 to 4 per cent.
Here's the point: the news the media didn't think worth passing on is that, notwithstanding its downward revisions, the Reserve is still forecasting that growth will accelerate from now on.
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