The day after Australia registered a pretty good economic growth number, the press didn’t want to believe in it, instead preferring to worry about a poor consumer spending number for the September quarter.
You better believe it!
This revelation came out one day after we learnt that in October, retail rebounded to such an extent that stocks such as JB Hi-Fi and Harvey Norman, which have been shunned by the market because of the Amazon threat, saw their stock prices spike as short-sellers ran to buy their stocks.
Sales on the up
On Tuesday, when the retail results came out, the Australian Bureau of Statistics reported that sales rose by 0.5% to $26.05 billion in seasonally adjusted terms, topping expectations for an increase of 0.3%.
Economic growth up
Then on Wednesday, economic growth for the year to September came in better than expected. It was a good week for economic data but my mates in the media didn’t want to see it that way.
Give me the truth any day
So I ask: what headline would you prefer to read about the same economic data? On one hand, you could read about “Consumers on a spending strike…” or on the other — “Economy growing at the fastest pace in 15 months!”
If it was up to me and I wanted to tell of the picture that seems to be emerging for the Oz economy, I’d run with: “Economy stronger than bullish RBA expected!”
Why would I do that? Well, that’s simple — it’s the truth.
Show me the proof
The bill shock story in one newspaper came with no proof. Inside the better-than-expected 0.6% economic growth number for the September quarter — that’s April, May and June — the contribution from consumers was 0.1 percentage points, the weakest in five years!
That then became the target of those who want to believe that their tale of many woes about the Oz economy has been too negative or maybe even too wrong. Like a child clinging on to an unbelievable argument, they were clutching at straws, trying to deny what’s so apparent — our economy is on the comeback trail.
I’m sick of negativity
You won’t be surprised to learn that some in the media doubt the good retail figures, despite the stock market showing a real inclination to believe that the stocks smarties had maybe got it wrong.
Amazon not amazing
To be truthful, the retail figures did lead to headlines about Amazon being underwhelming, which is true, but anyone who thought this US behemoth was going to hurt retailers from day one was naïve. Amazon will be a slow burn for our retailers. Some will be burnt more than others, though it will take time.
Don’t even mention them
Of course, the big mistake the media will make, and I’m doing that right now, is to talk about the big US online retailer, as it’s the master of free publicity.
My brilliant idea
Here’s an idea: all of us in the media go on strike against this US online retailer, so it has to spend money on advertising! No, we could never be as sneaky as a new age, smart online business that breaks all the rules of conventional business, such as ‘don’t make a profit first up just lower prices to consumers and kill rival businesses in the process.’
But I digress.
Good news is here
Let’s get back to the good news story and my point is, for now and undoubtedly going into 2018, the run of economic data says it’s not silly to be optimistic.
The September economic growth number came in at 0.6% and, if you add up the past four quarters, you get the 2.8% growth figure, which was higher than what the RBA had tipped of 2.5%. Now remember, the Reserve Bank has tipped that 2018 will be a 3% plus year for economic growth, and a lot of economists have respectfully scoffed at their optimism. However the pointy-headed RBA bankers look like they’re on the money.
Stock market looking good
And the stock market has probably backed their positivity, with local equities up about 7% over October and November.
More growth tales
Back to growth and the RBA likes to take the last two quarters of growth — 0.9% plus 0.6% — and multiply them by two to get a feel for what the economy has been doing over the past six months. This is to try and guess what might happen in the months ahead.
On that figuring, we’ve been on a 3% pace and this is the magic number where unemployment tends to fall, which I reckon is a great news story.
I see good news, why can’t others?
At the risk of sounding like Animal Farm — falling unemployment good, rising unemployment bad! This is so basic and I don’t know why newsmakers can’t embrace the so obvious good news wrapped up in these September quarter numbers, which I bet will be trumped by the figures we see in the current quarter.
Wages up in 2018
Lately we’ve seen the business investment numbers come in much better than expected and there are positive predictions from respected economists that 2018 will bring better wage rises. Add these to the surprise retail story recently and the December quarter is look promising.
This is why I prefer CommSec’s headline on the growth numbers: “Economy growing at the fastest pace in 15 months”. Oh yeah, I forgot. This headline was made by an economist rather than a journalist! That might explain it.
Peter Switzer is the founder of the Switzer Super Report, a newsletter and website for self-managed super funds.