In a couple of weeks’ time, I’ll address a group of successful owners of small-to-medium sized and even large business operations. The organiser listens to me on my 2GB spot each morning at 6.40am with Ben Fordham.

The organiser didn’t tell me what he wants me to talk about but he presumed I’d want to cover the outlook on the economy and what business will be like going forward, given I too have a medium-sized enterprise that clearly straddles the media, financial advice and funds management.

He was right. Knowing the kind of economic and political field we’ll be playing on should have a big impact on how we draw up our winning strategy. So that’s what I’ll talk about. And I thought I’d share my observations with you first and throw in a bonus, as I love to over-deliver! And it goes double when I’m doing my ‘stuff’ for a live audience.

So what are the big economic takeout facts right now that should determine what the economy will look like across 2021? I’ll do this in bullet point form so you don’t doze off! Here goes:

1. 2021 will be the start of a rerun of the 1920s Roaring 20s. Why? Huge fiscal spending worldwide plus unbelievably low interest rates plus vaccinations will stimulate economies.

2. It’s why commodity prices, especially for iron ore and oil, are going through the roof — surging global demand will do that!

3. The IMF now expects global GDP to grow 5.5% in 2021, an upgrade from its 5.2% projection published in October last year.

4. Australia’s projected growth ranges from 4.5% to 5%, which is huge compared to our usual growth rates. The chart below shows what we’re used to and it’s more like 2-3% growth!

Australia economic growth

5. The RBA has suggested our house prices could rise by 30% over three years and AMP Capital’s Shane Oliver says 10% a year for three years has been done before! (Check out my interview with Shane on this topic here: https://switzer.com.au/the-experts/switzer-tv/will-house-prices-rise-by-30-and-what-regions-are-hot-and-getting-hotter/ )

6. The stock market has rebounded 45% since the March 23 Coronavirus crash low and needs to rise by 6.6% to get back to the levels on S&P/ASX 200 Index that prevailed before we were shocked by that damn virus.

7. For the US stock market, FactSet estimates S&P 500 earnings will surge 22.1% in 2021, which would be more than double the 10-year average of 10% and the best increase since 2010 (when EPS soared 39.6%).

8. We play follow the leader with Wall Street, but AMP Capital’s Shane Oliver thinks we’ll outperform the Yanks this year because of our superior handling of the virus. And in the first year of a big global recovery, cyclical stocks (like our big miners) do well.

9. The weekly ANZ-Roy Morgan consumer confidence rating rose by 2.3% to an equal 14-month high of 111.2 (long-run average since 1990 is 112.6). 

10. The NAB business confidence index fell from a 31-month high of 12.7 points to 4.5 points in December (long-term average is 5.1 points). But the business conditions index lifted from 7 points to 28-month highs of 14.2 points (long-term average is 5.3 points). The employment conditions sub-index rose from -4.2 points to a 27-month high of 9.3 points.

11. Retail spending was up 9.4% on the year. Total Aussie retail turnover eased from a record high $31,654.1 million in November (highest since records began in April 1982) to $30,324.2 million in December. 

12. The IHS Markit ‘flash’ PMI for manufacturing rose from 55.7 to a 49-month high of 57.2 in Januaryand the services business activity PMI fell from 57 to 55.8 in the month. But any reading above 50 indicates an expansion in activity.

13. St George’s economics team on the job market: “In December, 50.0k jobs were created. This follows the creation of 180.4k jobs in October and 90.0k in November. Jobs are being recreated at a solid pace as the economy re-opens in fits and starts. We believe there is more job creation to come in 2021.”

14. Unemployment fell from 7% to 6.8%.

15. On job ads: “Job advertisements in Australia rose by 9.2 percent month-over-month to the highest in 18 months of 159,156 in December 2020, after a downwardly revised 13.5 percent increase a month earlier,” Trading Economics reported. “This was the eighth straight month of gains in job advertisement, as the economy reopened from coronavirus lockdowns.” And ANZ’s senior economist Catherine Birch said this: “The fast-paced recovery in job ads means solid employment gains should continue into early 2021 at least. It also suggests the unemployment rate could fall quite quickly in 2021,” she added. 

I rest my case. The economy and stock market will be rippers in 2021 and 2022.

What about political issues?

1. The Morrison Government’s Budget of $213.7 billion will propel the economy.

2. Low interest rates for three years will help create a Roaring 20s scenario.

3. China will be a problem, but as long as some improved relations happen over the next year, the fact that we’re not travelling overseas means we’re spending $69 billion locally instead.

4. As borders open up and vaccinations happen, there’ll be interstate spending for travel and business, which will be another boost to spending and job creation.

5. The so-called “fiscal cliff” will be a fiscal step down for some businesses and employees but the growth elsewhere will keep the majority of the economy powering along.

6. Joe Biden and the Democrats will be a worry for some industries (such as coal) but their overall bigger stimulus is at least a two year plus for economies and markets.

Things one day will go wrong — inflation will kick, interest rates will rise and stock prices will give into gravity, but it won’t be 2021. And I bet it won’t be 2022.

On what business legends have told me that will help you get the most out of next year, business-wise and money-wise, let me link well-known names to good advice, which not only are great reminding lessons for leaders but for anyone you lead who has a desire to succeed.

1. Edward De Bono: “To outcompete your rivals, think outside the square”.

2. Gerry Harvey: “Hang out with people who know more than you”.

3. John Maxwell: “Be committed to self-improvement”.

4. Sir Richard Branson: “A business has to be involving, it has to be fun, and it has to exercise your creative instincts.”

5. Jim Collins:“To create an effective envisioned future requires a certain level of unreasonable confidence and commitment. Keep in mind that a BHAG is not just a goal; it is a Big, Hairy, Audacious Goal.”

6. Steve Jobs: “ “Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”

And finally, as the Australian Tennis Open starts soon, here’s my favourite from Chris Evert that underlines how important it is to really want to win and be focused:

There were times when deep down I wanted to win so badly I could actually will it to happen. I think most of my career was based on DESIRE.

The economy is set to provide strong tailwinds for your business and wealth-building, so the trick is to draw up a winning plan and then set your sails strategically remaining really focused on your plan. Remind yourself every day what that plan is and what you have to do to make it happen. And I bet it will.

Here’s Steve Jobs, one more time: I’m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance.

That’s so spot on!