Weeoo, weeoo, weeoo. According The Pascometer and the confidence brains trust at Sydney Morning Domain, the consistent falls in consumer sentiment are all Joe Hockey’s fault:
What was a somewhat bemusing sidelight of politics and consumer confidence has now become serious: the government has so peeved Labor supporters that they’ve tipped the consumer confidence balance to negative.
As the accompanying graph shows from the demographic breakdown of the Westpac/Melbourne Institute consumer confidence index, Labor voters confidence has plunged below GFC levels. Joe Hockey’s constant negativity and dire warnings have scared them more than the Great Recession.
Actually, what may have scared them more are the constant and infallible sell signals emanating from The Pascometer’s empty reassurances. Take a look at the chart. What did we see in the three years after the GFC for Liberal voters? As well, here’s an older version of the same chart including the last election in 2007 with exactly the same crash in the incumbent party supporters and cross-over (though both weighed down by the GFC):
Being in opposition seems to be a perpetual sate of depression, not a condition influenced by the day-to-day utterances of this politician or that. Indeed Wayne Swan did nothing but talk up the economy and where did that get him?
As I’ve argued before, and is argued by more sophisticated behavioral economists like Robert Shiller (in the mold of Keynes), confidence derives from economic fundamentals, not the other way around.
Is it really fair to blame the Treasurer’s rhetoric for: a housing market that is affordable only to wealthy speculators and foreigners; an export sector dominated by dirt that the Chinese seem increasingly less inclined to buy; wider stagnating sectors with no competitive edge and collapsing iconic brands ; a currency that refuses to provide relief; unemployment that’s marching steadily north; a stock market that’s radically under-performed other international bourses for five years, and a fundamental Budget problem owing to deteriorating demographics?
It’s no mystery at all why national chins are dropping once more (unless your political party is in power!).
I obviously agree that the government could do a better job of describing the issues and preparing policy responses but screaming “doomsayer” from on high every time someone raises the discussion is hardly reassuring leadership (though it makes for a remarkably good sell signal generator).
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
