Treasurer Josh Frydenberg has repeatedly told us about the“damn lot of money” Aussies have stashed away over the last few Covid years. As of late last year, this stash was valued at $260bn. And the nation’s number one seed when it comes to crunching money believes this will power the expected booming economic recovery. But could this optimism be trumped by a stock market crash?

Overnight, the US stock market was in slide mode, which is bound to take our share prices down today. And a former big call merchant, Boston’s Jeremy Grantham, has tipped a 45% crash! Happily, the 83-year old Grantham has had a bad run for some time.

Incidentally, he’s been tipping a huge Australian property crash for over a decade. When it comes to predictions, you have to get the timing right.

I actually googled “Grantham Australia property crash 2010”, and yep, it came up!

Right now, US stocks (especially tech stocks) are being dumped because of the fear that US interest rates will rise too quickly this year. There is a central bank meeting on interest rates this week in Washington. This explains why US stocks have lost 9.6% since the start of the year. Our market has lost 5.93% over that time.

Last night on my TV show, I interviewed two fund managers who said they see this as a buying opportunity and didn’t believe Grantham’s big call would come true. In many ways, what households have saved here and worldwide could help these fund managers be proved right.

The CBA economics team calculated that we’ve saved about $260bn since the Coronavirus hit us and the economy.

Of course, not all Aussies did it easy. The numbers experts think younger Australians had less of a savings uplift because of a variety of issues — pay rates, nature of their jobs, etc. And bosses of beaten up businesses are a group that are the silent sufferers. JobKeeper was a big help but it didn’t restore businesses to the revenue and profit position that they were in before the enforced closure of the economy by the governments of Australia. But that’s an issue for another day.

Right now, we have to hope that Omicron becomes a lesser issue over February and the economic rebound (powered by household spending of that $260bn in savings) helps restore profitability, creates jobs and helps collect taxes for governments to get their budget deficits down.

In The Sun-Herald and Sunday Age, Caitlin Fitzsimmons referred to the newspaper’s survey on what we intend to spend our savings on. And surprise, surprise, it was international travel and home renovations!

Overseas travel actually helps overseas economies, though travel agents, airlines and businesses such as Webjet will benefit. By the way, there’ll be lots of Aussies who’ll steer away from overseas trips until we stop talking about viruses, so local holiday operators will still do well.

I believe the magnitude of our savings (“households have saved an average of 17.2% of income since the pandemic started, according to the national accounts released in December, compared with an average of 6.1 per cent for the two years before that,” as Fitzsimmons reported) will prove to be a huge stimulus for our economy and stocks in 2022, and rolling into 2023.

After the end of the Delta lockdown, the ABS said that in November retail sales hit a record $33.4bn, which was a 7.3% rise from the previous month and 5.8% higher than November 2020. That’s the kind of spending that will power the economic boom Josh and I are predicting for the year ahead.
All we have to see happen is an end of the Omicron threat and no new versions that get in the way of normalcy and the expected abnormal spending by Aussies and other consumers right around the globe.

If that happens, Jeremy Grantham will be proved wrong, again. But if it doesn’t happen that way, God forbid, he might be right for a change!