Good news on economic front

[Jovial Monk]

Monthly trade deficit has turned into a surplus, some time ago, and is reducing the accumulated deficit. The Bureau of Statistics says net exports have added a remarkable 2.2 percentage points to economic growth in the March quarter. (source, ABC website, statement by Res Bank Governor)

Reserve Bank felt it could leave interest rates unchanged at 3%--this may not be such good news for exporters as it makes our dollar attractive to investors causing the Aussie dollar to stay high or even rise.

Retail sales are holding up as are jobs, housing construction too:

And in good news for the housing sector, the number of homes approved for construction in April was a bigger than expected - 5 per cent higher than the month before.

The govt--Rudd/Gillard/Swan/Tanner--aren't doing too bad in these very difficult times. And the worst of the downturn may have passed with retail and manufacturing in China up. China is being a bit pissy ATM, doesn't want to be held to prices Japanese steel mills have negotiated, guess our miners' attitude in the boom is being returned now the shoe is on the other foot.

Having fun in QT too--jocular remarks from several ministers about the biffo in the Fib party room this morning

Tomorrow the GDP figures.

[Auzgurl]

http://www.news.com.au/business/story/0 ... 62,00.html


Australian avoids recession as GDP up 0.4pc

June 03, 2009 01:10pm
AUSTRALIA would be in recession if it hadn't been for the Federal Government's multi-billion dollar stimulus package, Prime Minister Kevin Rudd has said.

Without billions spent on cash payments and infrastructure spending, the economy would have contracted by 0.2 per cent, dragging the country into an official recession, said Mr Rudd.

"In the worst global economic recession in three-quarters of a century we have good news for the Australian economy," Mr Rudd said.

"Although we're not out of the woods yet."

Australia is the only advanced economy not in recession, with the smallest public debt, said Mr Rudd.

But he also warned that future periods of negative economic growth could not be ruled out.

Treasurer Wayne Swan said Australia is going forward while other countries go backwards, but warned of more jobs losses ahead.

The economy would have shrunk by 0.2 per cent in the March quarter if it hadn't been for the Rudd Government's stimulus package, said Mr Swan."


Blowhard Turnbull trying to churn this into sour cream..it was a pathetic...standing in front of a bunch of journos actually happy with the news and he got the reception from them he deserved.

[skippy]

This really is good news, nobody expected it, today was supposed to be the first official day of the recession,Turnbulll even went out and bought a new suit to celebrate.
Either the Australian economy refuses to believe the hype or what Rudd is doing is actually working, its beginning to look like Rudd really does know what he's doing, and Turnbull really does have no idea.

[mantra.]

Yes it is good news - but was Rudd just lucky or did the government's good economic management help create this?

[skippy]

Yes it is good news - but was Rudd just lucky or did the government's good economic management help create this?

A bit of both I think, the bottom line is the retail industry is going gang busters, Rudd has to be given credit for that.

[Leftofcentresalterego]

Yes, I agree it was a bit of both. This crisis was finacial in origin. Australian banks were much better regulated than many of their overseas counterparts and we did not see the the devastating run of bank failures that the US, Europe and many other places experienced. So that part was luck but it was also good management.

But the retail sector - the biggest employer in the country - would doubtless have shed many more jobs than it has if it were not for the stimulus payments. Retail spending logically should have slumped fairly seriously - lots of people were given a free monetary gift (no it will not burden future generations with taxation), told to "spend for your country" and they did. I can't see any reason to doubt their effectiveness in this situation.

Poor old Allbull and Shrek - they didn't have a policy idea before (other than run down the government's course of action) and they have even less of one now.

[Jovial Monk]

A lot of it was the govt's action. No banks have fallen over, and they would have without the wholesale guarantee--a profit of $3Bn is not much use when $10Bn of long term debt has to be rolled over and no one wants to lend. Guarantee wholesale, must guarantee retail--no runs on the banks! Deposits of up to $20K were to be guaranteed in very early thinking about the GFC in March. When it came to it it was realised a $20K limit on deposits to be would result in a lot of churn as depositors with over $20K would rearrange their deposits into a number of deposits so all their money came under the $20k limit and this churn could lead to a run. You may remember Lottabull suggested $100K limit but there were still enough people/corporations with over $100K to cause the dangerous churn so it was made unlimited and then reduced to $1m.

The 2008/9 budget was made expansionary not contractionary, that is how early this govt acted.

The first cash splash was 1% of GDP--conventional economic wisdom is a .5% of GDP is needed for a stimulus to be effective. Overheated housing market about to come crashing down, so the increased FHOG and a second stimulus payment (really a one-off tax cut) with quick & medium infrastructure to take up the slack until the big infrastructure that takes years to get started takes over.

Yeah it is all luck that our GDP rose in the March quarter. Luck that we gave Howard & Costello the boot 24/11/07!

Treasury came up with the advice, the govt had the balls to run with it.

[Sappho]

And now for a reality check... The market is down with retails leading the fall.

All is not roses I suposes.

[Jovial Monk]

This 'technical' definition of a recession as two quarters of negative growth is crap. We are in recession, basically just moving sideways for a year, stunning achievement tho it is, is not enough to soak up all the school leavers entering the workforce. So, we are in recession.

But retailers have another stimulus that is just now taking effect and housing construction also going up, so for the long term buying shares in Woolies right now is good.

Longer term, NYT (sorry, no link) reports Chinese & Indian economies recovering, good news for us!

[Leftofcentresalterego]

Yeah, I agree that really we are in recession. But by crikey, we are doing better than almost everyone else in the world.

Government spending works. It has underpinned jobs in the retail sector (inc wholesale, transport and storage). And it has given us a trade boost as well.

Poor old Allbull and Shrek just don't seem happy at the relatively good news - can't imagine why