Following NAB’s effort yesterday, whereby it provided seven reasons why not to be concerned about the economy, CBA’s chief economist, Michael Blythe, has given 10 reasons to feel positive about the economy. From Fairfax:
- We’re already near the bottom of the mining boom cliff:…the collapse in spending on mining exploration in the June quarter means we’re much closer to hitting rock bottom (pun intended). It’s unlikely such a weak number will be repeated next quarter.
- Storerooms are empty:…the inventory to sales ratio is at a record low…
- A home renovation boom is on its way… Spending on home renovations is finally picking up after a period of weak growth. Renovations make up about 40 per cent of total residential construction activity and will help to offset any slowdown in new home construction…
- Workers are getting pay cuts, not the sack…
- We’re becoming more internationally competitive:…restrained wages growth and a lower dollar will make our exports more attractive…
- The job market is holding up pretty well…
- Households have amassed a war chest of savings… the national savings rate has soared since the GFC…
- We’re spending less overseas…
- You can’t control the weather…good weather boosted resource exports in the first quarter of the year, earning some negative payback to growth in the June quarter…
- Growth will probably be revised up anyway…
I don’t disagree with everything that Blythe has said, just some of it. I also believe that he has made some notable omissions.
