Unconventional Economist


Weekend Reading: 23-24 January 2021

Global Macro / Markets / Investing: Rise of the superstar firms: Taking oligopoly seriously in macroeconomics – VOX How much UBI spending should go to children? – UBI Centre Stocks Don’t Care About the Coup – The Atlantic Markets upbeat on Yellen’s push for large fiscal stimulus – Business Times Americas: 900,000 filed for jobless


CBA: Household spending intentions rising

CBA has released its household spending intentions for December, which remain bullish as Australians emerge from COVID restrictions: Summary The Household Spending Intentions (HSI) series for December 2020 showed that at the end of last year there was a very welcome improvement in spending intentions for Travel, Health & Fitness, Entertainment and Motor Vehicles. Home


In NSW property narco state, developers rule

Last year, NSW Planning Minister, Rob Stokes, used COVID as an excuse to turbo-charge development: NSW planning processes and development applications will be fast-tracked in a bid to support the construction sector and maintain jobs during the COVID-19 pandemic. Assessments of state significant developments, rezoning and development applications will be accelerated under the changes announced


NZ property market experiencing “perfect storm” and “unprecedented” price gains

ANZ Research has released a new report on the New Zealand property market, which claims that a “perfect storm” has developed that has driven “unprecedented gains”: Record Breaker House prices rose 2.9% in December, following similar stellar rises in October and November. This saw a quarterly gain of 7.7% for Q4 (figure 1) – the


Hospitality and tourism demand more bailouts

Businesses in Sydney’s northern beaches area have called for JobKeeper to be extended, while the Restaurant & Caterers Association has deepened calls for an industry-focused ‘HospoKeeper’: Restaurant and Caterers Association chief executive Wes Lambert wants an industry-focused “HospoKeeper”. He said a slow deployment of a vaccine meant more industry-damaging lockdowns and border bans were possible…


Scott Morrison has no idea on quarantine

After abrogating responsibility for quarantining of overseas arrivals to the states, Prime Minister Scott Morrison has rejected QLD’s sensible proposal to shift quarantine from city hotels to regional mining camps, claiming resources workers could become infected and thus hamper Australia’s economic recovery: Ahead of national cabinet on Friday, Mr Morrison expressed scepticism about Premier Annastacia


Christmas retail sales disappoint

The ABS has released preliminary retail sales for December, which fell sharply from November and missed analysts’ expectations: Key statistics The seasonally adjusted estimate fell 4.2% (-$1,329.9m) from November 2020 to December 2020. In seasonally adjusted terms, Australian turnover rose 9.4% in December 2020 compared with December 2019. Following the November rise, all industries except for Cafes, restaurants and takeaway food services


CBA: Household income and savings booming

By Gareth Aird, Head of Australian Economics at CBA: Key points: Growth in household income has inched higher over the past few months despite the two-staged tapering of the JobKeeper and JobSeeker payments. Growth in salary and wages paid into CBA bank accounts has lifted materially over recent months reflecting strong growth in employment, hours


Youth labour market continues to lag

Yesterday’s ABS labour force release for December revealed that Australia’s youth unemployment rate – i.e. for those aged 15 to 24 years old – fell sharply on the back of a sharp fall in the participation rate. The headline youth unemployment rate fell 1.7% to 13.9% but remains more than 2.5 times higher than the


Links 22 January 2021

Global Macro / Markets / Investing: Gold rises due to US stimulus expectations – Guardian Mag S&P 500 rises to all-time high ahead of Biden’s inauguration, Netflix leads Nasdaq to a record – CNBC Inflation Is Coming. That Might Even Be a Problem. – Bloomberg Risk of ‘lost generation’ amid global asset bubbles and debt


Alarm! “US to face underpopulation”

The population ponziteers are at it again, this time warning that the US is facing “underpopulation” because its birth rate has fallen to a 35 year low: The U.S. birth rate in 2019 fell to its lowest level in 35 years, well below the requisite 2.1 babies per woman required to sustain our population through


Netflix juggernaut crushes competition

Subscription video-on-demand giant Netflix has advised that it gained more than 8.5 million global subscribers in the December quarter and 37 million during 2020. Netflix finished the 2020 calendar year with 203.7 million customers worldwide. It also reported revenue of $US6.64 billion for the December quarter, compared with $US5.45 billion for the same period in


Employment in detail: Recovery on track

The Australian Bureau of Statistics (ABS) today released its labour force report for December, which registered a 0.2% fall in the official unemployment rate to 6.6% of a 0.4% increase in jobs: Full-time jobs rose by 35,700 and part-time employment rose by 14,300: The participation rate rose another 0.06% to 66.16%: Total employment has rebounded


Superannuation steals from the pension

Industry Super Australia (ISA) continues to lobby the federal government to increase the superannuation guarantee (SG), arguing that if the super rate increase was abandoned, it would “heap pressure on the pension”: ISA said it was vital the legislated increases in the superannuation guarantee – from 9.5 per cent to 12 per cent of wages


ABS: Jobs up, unemployment down in December

The ABS has released its labour market report for December, which shows a strong increase in jobs as well as a 0.2% decline in the headline unemployment rate to 6.6%: Key statistics Seasonally adjusted estimates for December 2020: Unemployment rate decreased to 6.6%. Participation rate increased to 66.2%. Employment increased to 12,910,800. Employment to population


Property Council CEO demands mass immigration

In yesterday’s article entitled “Why housing construction will crash in 2022”, I warned that the property lobby would intensely lobby the federal government to restore mass immigration: “…expect to see intense lobbying from property groups calling on the federal government to provide more subsidies, as well as to open Australia to migrants. Without a return


Roy Morgan business confidence surges to 3-year high

Roy Morgan Research’s business confidence survey for December has reported booming conditions, with confidence surging to a three year high: In December 2020 Roy Morgan Business Confidence jumped 14.1pts (+12.9%) to 123.2 – the highest monthly reading for three years since January 2018 (123.5). Business Confidence has now increased a record 37.6pts (+43.9%) over the


Time to take quarantine out of hotels

ABC 7.30 Report ran an interesting segment questioning whether hotels are the safest and best places to hold people in quarantine? The key extracts from the transcript are below: PROF. TONY BLAKELY, EPIDEMIOLOGIST: Hotels have been very convenient in this outbreak, in this pandemic, because they were there. However, it is not perfect, it is


No justification for removing responsible lending laws

Kevin Davis, Emeritus Professor of Finance at the University of Melbourne, has slammed the Morrison Government’s planned scrapping of responsible lending laws, which he argues is “particularly egregious” and a “triumph of ideology and vested interests over logic and evidence”: The axing of responsible lending obligations (RLOs) under the National Consumer Credit Protection Act 2009


Links 21 January 2021

Global Macro / Markets / Investing: Stocks rise ahead of Yellen call for US to ‘act big’ on stimulus – Retro Post Can Paypal make inroads in China’s vast digital payments market? – CTGN The Urgent Case for Shrinking the Economy – New Republic Fighting climate crisis made harder by Covid-19 inequality, says WEF –


Have mortgage rates bottomed?

Some economists believe that fixed mortgage rates in Australia might have hit their bottom: The Reserve Bank Of Australia has been buying up government bonds to maintain record-low interest rates. According to the National Australia Bank, the RBA will own nearly all April 2024 bonds by the middle of this year. Economists say this will


Melbourne faces ‘carmageddon’

Driving back from my early morning boxing training this week, I have been struck by the huge rise in Melbourne traffic as the city emerges from summer holidays. Crossing the bridge over the M1 at East Malvern at 7am has revealed a car park below, with traffic snarled and barely moving. The culprits appear to


CBA’s household indicators suggest economy was normalising in Q4 20

By Kristina Clifton, senior economist at CBA: Key Points CBA’s household indicators suggest that the economy was starting to normalise in Q4 2020. The share of households receiving a salary payment lifted across all age groups while the share receiving government benefits fell. Investment income also retreated towards more normal levels as less people withdrew


Industry calls for ‘HospoKeeper’ to replace JobKeeper

Restaurant & Catering Australia CEO Wes Lambert has urged the federal government to continue to provide financial support for the hospitality industry after the JobKeeper wage subsidy scheme ends in March. Lambert has written to Treasurer Josh Frydenberg and Tourism Minister Dan Tehan arguing the case for additional sector-specific support for hospitality workers. Dubbed ‘HospoKeeper’,


Deloitte: “the insolvency drought has begun to break”

Deloitte’s weekly economic briefing warns that Australia still faces significant insolvencies, despite a wave of strong economic data.  However, the risks have reduced markedly compared to a few months ago: Although the damage of 2020 is winding back fast, it hasn’t disappeared, and it will linger. Many relief measures were taken to alleviate the COVID-induced


Consumer groups lash irresponsible mortgage lending laws

Consumer groups have hardened in their opposition to the Morrison Government’s plans to abolish responsible lending laws, which were introduced in 2009. The Financial Rights Legal Centre has urged Senate crossbenchers to vote against any such move, while Financial Counselling Australia and CHOICE warn that scrapping the responsible lending regime would make it easier for