This isn’t just me being “always positive” (as some have accused me of). It’s because recent data drops look pretty good.

As Monty Python’s team would say: “And now for something entirely different”. So, what’s entirely different? There’s some positive news on the Aussie economy! Hold this thought — if Donald Trump doesn’t spook the financial markets by going crazy on China with tariff demands, and the Federal Reserve’s Jerome Powell cuts interest rates, then we should see good vibes coming out of Wall Street.

And you don’t have to be Warren Buffett to know that the Aussie stock market takes its lead from what the New York Stock Exchange gets up to on a daily basis.

So, if Donald and Jerome don’t shock us with unhelpful behaviour, then our own economic comeback could set the scene for another good year for stocks.

These recent data drops look pretty good.

Let’s start with the most recent reading on what consumers are thinking. The summary has to be that it’s on the improve.

When AMP economist My Bui looked at the recent snapshot from the Westpac-Melbourne Institute’s consumer survey, this what she noted: “More Australian consumers are feeling optimistic this month about their family finances, economic outlook, and purchasing intentions.

“The confidence index ticked up to an almost neutral level of 98.5, much higher than last month’s 93.1 and the previous 12-month average of 91.3, signalling some pickup in household spending in the upcoming months.”

Neutral is 100, where the number of optimists equal pessimists. This chart below shows the improving attitudes of local consumers. You’d have to thank three rate cuts this year and the prospect of more to come.

The chart also depicts how consumer confidence was rocked by Covid and the related lockdowns over 2020 and 2021. And then 13 interest rate rises were no help for consumer sentiment, as the RBA tried to kill inflation that was fuelled by cost explosions as the pandemic screwed up supply lines worldwide.

To make price spikes even worse, the RBA cut interest rates to near zero and the inflation genie got out of the bottle.

The survey also found households are turning very bullish on property prices, with the house price expectations survey hovering around record highs. The “time to buy a dwelling” index reached a 4-year record!

While that’s great news for sellers, not so for buyers.

On the business front, the news is also on the improve, given what the Purchasing Manager’s Index (PMI) is telling us.

Australian business conditions based on the PMIs for August trended higher again, with gains in both manufacturing and services readings, while new orders remain around 3-year highs.  “Most positively, input and output prices both fell slightly after posting a seasonal pickup in July,” My Bui reported. “Overall, the PMI surveys point to improving Australian economic growth throughout this year.”

Better economic growth and falling interest rates are very good news for stocks, which largely have been reporting better than expected.

The AMP team regularly looks at reporting season and this is what they’ve found:

1. 27% of results have seen earnings beating consensus estimates. While this is below the norm of 40%, just 30% have surprised on the downside, which is also less than the norm of 41%.
2. 65% of companies have seen earnings rise on a year ago. This is better than the norm of 56%.
3. 66% of companies have increased their dividends on a year ago, which is above the norm of 59%.

It’s still early days and we’ll know more in two weeks’ time, but if the economic growth and interest rate outlooks come to pass, there seems to be a decent base for companies to have a better 2025/26 than 2024/25.

Today we see the latest monthly CPI. Given the improving economic story, it would be ideal that there’s no worrying spike in inflation that could draw headlines such as: “Forget rate cuts!”

The recent signs from an economy sailing along nicely to better shores give reason to be optimistic. So, let’s hope Donald, Jerome and the RBA’s Michele Bullock don’t rock the boat.