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Paul McCartney, me and my accurate optimism!

Peter Switzer
27 November 2017

By Peter Switzer
The greatest criticism I face from a small band of Armageddon-lovers is that I’m too optimistic and it’s as though they think I’m blinkered to all the problems out there. But that’s not right — it’s just that I don’t think these problems are about to blow us up right now.

Once upon a time, Paul McCartney was criticised by media music luminaries for writing silly love songs. So to answer them, he wrote the song “Silly Love Songs” and what lies below is my response to critics of my optimism.

Five years ago, Jim Chanos, a stocks’ shorter, was shorting China and spreading bad news stories in the press and with influencers in the market, but his predictions of a scary China syndrome, didn’t work out for him and his hedge fund followers.

Does anyone wonder what happened to the Chinese ghost towns that were going to bring down the then-second biggest economy in the world?

What about how Grexit would screw up the Eurozone, which now is growing at rates not predicted even one year ago? And then there was Japan, which has been in a virtual slowdown/recession for over 20 years but PM Abe and his economic policies are delivering more than expected. Sure, economists were expecting 4% and got only 2.5% but that’s miles better than what we’ve seen for decades.

I could go on about doomsday calls for iron ore, coal and oil prices but those too have disappointed the disaster dreamers!

Be sure on this: bad news will arrive one day — it always does — but my optimistic stance has been right since March 2009, when stocks threw off the GFC clobbering. So here I go again looking at the reasons why I’m positive on the Oz economy for 2018.

This what I like about our economic story:

  • Economic growth is tipped to head to 3% +.
  • Unemployment is 5.4% and falling — a 9-year low.
  • Employment is up 13 months straight and the best growth in 12 years!
  • CommSec: “Business borrowing is surging!”
  • Overall lending is at a 7-month high!
  • Business conditions are at a decade high! Business profits are at a record high!
  • Business confidence is up from 8.4 to 11.7 (Long term average is 5.9)!
  • Monthly consumer confidence is improving but not really positive yet.
  • ANZ’s weekly consumer confidence is at a 16-week high.
  • Construction soared 15% in the September quarter.Engineering surged 33% in the September quarter.
  • Occupied seats on domestic airlines at a 5½-year high of 78.4%.
  • CBA’s Business Sales Indicator was the strongest in five months.
  • The number of loans for new home purchases is at a 38-year high!
  • Annual wage growth is 1.9% and underlying inflation is 1.8%.
  • Economists are predicting wage rises to improve next year.
  • Reuters headline: “RBA’s DeBelle says Australia business investment is picking up.”
  • The Budget deficit is falling quicker than expected because of a lot of the good news above.

Sure, we have high household debt compared to GDP but interest rates are low and are expected to stay that way for a year or two (maybe three) and we’re only vulnerable if the world economy goes to custard.

So what’s the IMF view on this all-important global economy? Try this: “The global recovery is continuing, and at a faster pace,” its latest IMF Blog tells us. “The picture is very different from early last year, when the world economy faced faltering growth and financial market turbulence.

“We see an accelerating cyclical upswing boosting Europe, China, Japan, and the United States, as well as emerging Asia.”

In October, 2017’s forecast was upgraded by 0.1% to 3.6% and the 2018 number was increased by 0.1% to 3.7%. In case you forgot (or didn’t know), the 2016 growth rate was 3.2%.

For the record, “Silly Love Songs” spent five weeks at number one on the Billboard Hot 100. It won countless awards in 1976. And in 2008, the song was listed at No. 31 on Billboard's Greatest Songs of All Time, commemorating the 50th anniversary of the Billboard Hot 100 chart.

I want to fill the world with optimism until it’s wise to stop doing so, which will be when the economic data turns from good to bad.

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