Ecenomics. Whats REALLY going on?

[want2bewealthy]

Economics. Whats REALLY going on?

Ok so the RBA are telling the public that retail spending is on the rise. Time to raise rates and curb that inflation again! So up rates go.

On the other hand I hear a total flip coming from media sources.
Not the most reliable of sources but a source nonetheless.

Then theres my personal experience.
I'm currently working partly in retail and we've been dead quiet..
The owner tells me it's the quietest year since 2003, and we're actually only selling half of what we did then..

I've spoken with Government lead buyers and they all tell us that the Government has cut back on their annual budgets and they cannot afford to purchase this year.

So from my experience, spending is definitely sliding very sharply.

Whats really going on?
If you ask me the recession is biting harder than ever on our retail business. FWIW we didn't feel a thing when the media told the public that we were in the depths of the worst.

 

[bene313]

We had emergency level rates come about from the GFC. The RBA don't like keeping rates this low as it provides no room to move if they need to go down further (in case of say another emergency). So they are heading back up for now - so there's room to go back if need be.

In terms of the economy - my mates at the big miners are saying the boom is back on. Busy, busy. Although this might be different to what's happening on the east coast.

 

[keithj]

From the horses mouth, Glenn Stevens spoke about Economic Conditions and Prospects today.

He concluded....

...
Australia has survived what some have labelled ‘the great recession’ in the global economy. So, as it turns out, have a number of countries that are of importance to us in our region. The common ingredient seems to have been reasonably healthy financial systems accompanied by liberal doses of policy stimulus.
Our task, and theirs, is now to manage a new economic upswing. This will be just as challenging, in its own way, as managing the downturn. But it’s a challenge plenty of other countries would like to have.

Other snippets

While several major countries have had one of their most, if not their most, serious recessions in the post-War period, Australia had arguably one of its mildest.
...
As a result, the rate of unemployment, at about 5¼ per cent, is more than 2 percentage points lower than we forecast a year ago.
...
Measures of business confidence and conditions in most of the surveys carried out by private organisations have for some time been at levels that are suggestive of something like average rates of economic growth.
...
The Reserve Bank is of course aware that the picture is not uniform across every region or industry.
...
For the time being, at least, the global economy is growing again. Forecasters expect an outcome something like trend global growth in 2010 and 2011
...
...Australia’s terms of trade will, it now appears, probably return during 2010 to something pretty close to the 50-year peak seen in 2008.
...
It is noteworthy that, although measures of consumer and business confidence suggest that people are essentially quite optimistic about the future, a degree of caution still characterises consumer spending decisions. Some areas of retail sales are quite soft.
...
Given all of the above, one would not expect the setting of interest rates to be unusually low. If the economy is growing close to trend, and inflation is close to target, one would expect interest rates to be pretty close to average.
...
Eighteen months ago, the Board moved quickly to establish a much lower level of interest rates in the face of a serious threat to economic activity. But interest rates couldn’t stay at those ‘emergency’ lows if the threat did not materialise.

 

[warrenkh]

re

Its the 2 tier economy at work in Australia. The mining sector is booming in the west and the top end, whilst the east - well... nothing much had changed.

Following the changes to student and skilled migration, there are alot of areas starting to feel the effect. The number of students had declined, and that lead to overall decrease in retail spending especially for places around unis and tafes. This is certainly good news for people who believe immigrants / foreign investors (namely Chinese) are the causes of all evils in Australia property, but very bad news for the retails and businesses who depend on the education sector.

Interesting times, good time to be a miner.

Warrenkh.2010

 

[Aaron Sice]

the west's retail spending isn't great either.

mining contracts can be awarded like primary school merit certificates......but it doesn;t change that fact that

A) no labour
B) no skilled labour
C) no pay rises yet and
D) rates are on the rise.

a lot of these mines take 5-10 years to get into full swing.

funny, that's about the recovery time sydney is picked for i guess....

 

[twobobsworth]

Work in the automotive industry. It's never been busier. Last month was our biggest sales month ever.

 

[Ausprop]

i'm consulting to a guy in the mining industry... business is going off the richter scale. mice to be choosing deals!

 

[reeco]

Bout to head up myself. Yandi here i come. Then onto Pluto for a few years. Anyone think they can handle 6 on 1 off?

 

[Sunfish]

The share market is an unbiased source and it reckons discretionary spending is down. Check out the charts for Harvey Norman (HVN) and JB Hi Fi (JBH)

Woollies reports next week I think. They don't expect too much there either.

 

[markpatric]

Costs of living are getting out of hand.

Seems the more assets/cash someone has the more worried they are.

Remove credit cards and spending would be down bigtime, people are living on credit more than ever what does this tell us?, there is a credit bubble in this country so huge it is a real worry, supported ONLY by the perception of property values.

 

[Nathan]

Business isnt travelling the best, personally RBA has got it wrong and I am not fixing rates as I see there culd be a round two of GFC.

As for house prices and rents, doesnt matter what people need this and there is an acute shortage of properties in Australia (well many places not every market) and this will deleverage the property market from the business sector.

Construction finance is down the gurgle and building will NOT get back to reasonable levels for quiet a while 24 motnths + and this is still compounding on the shortfall already there.

Immigration will NOT stop, as this is the countries only hope for survival, nore people in the country, more production, more exporting, more taxes, more demand = Healthy ecconomy.

You notice that most economies which survived GFC were expanding populations?

Increase immigration, and you have a healthy ecconomy.

 

[steveadl]

W2BW, don't read too much into one retailers (your bosses) current experience, especially projecting that over the whole economy. Whilst your bosses may be down, at the moment mine is running WELL above last years March/April. Doesn't mean the shop next door to me is doing well though. Conversely 2nd half of last year when other businesses were picking up steam again, mine wasn't brilliant.

Also remember that this is what he's telling you. Take it from me, bosses often do tend to over dramatise the bad times and underplay the good times. A lot of workers will resent it if the boss declares how he's raking it in at the moment and he can't believe how great business is. So it's better to just downplay it, keep your mouth shut, or let people think what they want.

Best places to look if you want anecdotal evidence of the wider economy is the big boy retailers (WOW, DJS, WES etc) and not sure if it's possible (Keith may know?) but check out ATO stats. or published reports on actual BAS statements lodged.

 

[WinstonWolfe]

Some info re the long term trends below.

Retail turnover plots for Qld, NSW, and WA show growth below the rate of GDP growth, and in a downtrend.


New Motor Vehicle Sales, Total vehicles - Long term
the kick up in 09 was undoubtedly influenced by the govt tax incentive.
seasonally adjusted vehicle sales should be telling this year.

 

[topcropper]

Immigration will NOT stop, as this is the countries only hope for survival, more people in the country, more production, more exporting, more taxes, more demand = Healthy ecconomy.

If more people were good, then the countries doing the best would be those that are the most overpopulated already. Nope. Bangladesh, India. Africa.

You notice that most economies which survived GFC were expanding populations?.

I'd reckon Australia has done the best as we have a low population divided by massive resource wealth and we have already de-industrialised, just because we could. The countries that have faired the worst were manufacturing countries with high wages with less resources.

Increase immigration, and you have a healthy ecconomy.

So of course we have a large rate of immigration, We are one of the few places in the world that is not overpopulated. As if Japan would want immigration with 130 million people and having to import most of their food? They went to war once already to get what they needed, and that didn't work.

It's a case of the Chicken and the egg.


Think about it a bit?


See ya's.

 

[random]

Yeah I'd be reading between the lines too. That's big stuff what you've said about your real sales lately.
There's also another thing I've noticed in retail.
Have you ever seen Harvey Norman running so many deals as he is right now , I mean they're all over tv , 48mths i/f , all sorts of things.
And then , there seems to be one hell of a lot of other companies advertising all sorts of things and discounts far more than usual .

I smell whiskers all over media dribble !

Cheers

 

[random]

At first I couldn't understand the logic in the RBA raising rates but now I think it was a have to be done.
B/c one , our house prices were getting way out of hand , investors won't like it but that has to be slowed imo.
And 2 , if we do get the delayed and artificially interfered with hit that many are still expecting is just around the corner, the RBA has leeway again to drop rates . But if they left them where they were they'd have no where to go in trying to curve any future troubles that could still hit us yet.
Mining , well we'll need to wait a yr or two for China to finish their last on their stimulus spending rush b/f we'll have any clue as to how real that recovery is and then we have BHP and like doubling their rates again - talk about biting the hand that feeds you- go figure .
China could easily say stuff you then on that one so reality has a way to go yet imo.

Cheers

 

[DeanoC]

Ok so the RBA are telling the public that retail spending is on the rise. Time to raise rates and curb that inflation again! So up rates go.

On the other hand I hear a total flip coming from media sources.
Not the most reliable of sources but a source nonetheless.

Then theres my personal experience.
I'm currently working partly in retail and we've been dead quiet..
The owner tells me it's the quietest year since 2003, and we're actually only selling half of what we did then..

I've spoken with Government lead buyers and they all tell us that the Government has cut back on their annual budgets and they cannot afford to purchase this year.

So from my experience, spending is definitely sliding very sharply.

Whats really going on?
If you ask me the recession is biting harder than ever on our retail business. FWIW we didn't feel a thing when the media told the public that we were in the depths of the worst.

You cant have people buying on credit indefinitely. There was a government stimulus that spurred on retail spending, but cheap interest rates meant more money spent everywhere.

We avoided a recession created by a credit bubble BY THROWING MORE CREDIT at everyone

And the reason car sales are up is because of tax breaks on cars to increase spending.

Scary to think that we expect subsidised spending and tax breaks to drive the economy now, all wrapped up in nice low interest rates. Thats not healthy at all, and the sooner we get back to people buying only when they have the money to do so, the better

 

[DeanoC]

Ok so the RBA are telling the public that retail spending is on the rise. Time to raise rates and curb that inflation again! So up rates go.

On the other hand I hear a total flip coming from media sources.
Not the most reliable of sources but a source nonetheless.

Then theres my personal experience.
I'm currently working partly in retail and we've been dead quiet..
The owner tells me it's the quietest year since 2003, and we're actually only selling half of what we did then..

I've spoken with Government lead buyers and they all tell us that the Government has cut back on their annual budgets and they cannot afford to purchase this year.

So from my experience, spending is definitely sliding very sharply.

Whats really going on?
If you ask me the recession is biting harder than ever on our retail business. FWIW we didn't feel a thing when the media told the public that we were in the depths of the worst.

You cant have people buying on credit indefinitely. There was a government stimulus that spurred on retail spending, but cheap interest rates meant more money spent everywhere.

We avoided a recession created by a credit bubble BY THROWING MORE CREDIT at everyone

And the reason car sales are up is because of tax breaks on cars to increase spending.

Scary to think that we expect subsidised spending and tax breaks to drive the economy now. Thats not healthy at all. Its not like there is mass unemployment either is there?

Maybe the reason why people are spending less at Kmart though is because they are now spending more of their disposable income ON HOUSING AND ACCOMMODATION. I got slammed on these forums when I had the nerve to suggest that retail spending will drop with people spending so much on housing these days.

Maybe we will get lucky and Rudd with give away more money to the masses to keep this charade going

 

[Piston Broke]

Maybe we will get lucky and Rudd with give away more money to the masses to keep this charade going

He's not giving away anything!
He is borrowing the money to handout to everybody.
With the assumption being that the interest bill from increased taxation when the economy improves will pay the interest & debt bill.

It's the same as a shopkeeper taking out a loan and giving his customers money to buy things until things get better, and then proudly pronouncing "Biz is great!".

The problem with the gov debt is who is going to pay it back?
Those with wealth or those without?
What will happen is that those with wealth (of anykind) are the only people who are able to pay the tax (interest) bill.
So the next 10 yr will see the advent of even more "wealth taxes" that will be imposed on the minority middle class investors and small biz.

 

[lizzie]

there seems to be a heck of a lot of money going out via the household budget atm (excluding reno costs) but it ain't discretionary spending.

water bill went up $100/qtr despite using less. electricty has gone up. internet and phone lines charges snuck up when i wasn't looking. food seems to have crept higher and we don't eat rich by any standards (spag bol tonight).