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From the contrarian indicator The Madometer today:
So it is that we face the development of a positive feedback loop. We have a sudden boost to confidence, as the nation celebrates a more pragmatic budget and the apparent end of the RBA’s easing cycle. This adds momentum to an already solid rebound in consumer spending, encourages a further acceleration in credit growth, and consequently a lift in house prices. In turn, rising asset prices provide a further boost to confidence and consumer spending – and so on etc, as the cycle goes.
So, consumer confidence and spending, as well as house prices, interest rates and the dollar all set to fall from here.
About the author
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.
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