When a leading banking economist surveys some new data and says that the economy looks like it’s better than was thought, what does the media do with it? That’s simple — it ignores it!
Of course, if dwelling approvals fell 11.3% in July, you can bet your life that a story like ‘we’ll be ruined’ would’ve been a good chance of a headline story.
So in case you missed it, dwelling approvals rose by 11.3% in July after falling by 4.7% in June. In trend terms, approvals rose by 0.2% in July. In the same month, house approvals fell by 0.6%, apartment approvals rose by 23.4% (holding just shy of record highs) and the value of all commercial and residential building approvals rose by 3.2% in July.
Now generally, I would’ve ignored a month’s figures, but when a respected Westpac economist like Matt Hassan says that the numbers suggests the economy might be better than expected, then this kind of news should be released to the public at large.
We have a crisis confidence, which I talked about last week, and there should be someone in the Government doing what I’m doing — trumpeting positive aspects of our economy. Why do those plonkers in Parliament need to be told this? Are we getting the politicians we deserve?
Remember, the housing sector is a big employer and it helps the multiplier effect that propels the economy’s growth and jobs to a higher level.
I watched the pomp and pageantry on TV yesterday at the opening of Parliament and thought, “what a waste of time!”
I want our politicians to do more stuff that gets us pumped and builds up confidence rather than simply whinge and whine about banks, the other party’s policies and the unusual views of Pauline Hanson.
This is what CommSec’s Craig James said about the building numbers: “The number of dwelling approvals surged in July, no doubt driven by the May rate cut and, in general, the super-low interest rate environment. It’s clear that despite a modest consolidation in overall activity, the housing sector continues to bubble along at a healthy pace. Home prices remain resilient, despite changes in regulation and tighter lending standards that have been adopted by the banking sector. Importantly, the pipeline of new building will continue to support broader-based economic growth over the coming 12-18 months. The housing sector is no longer on the Reserve Banks wall of worry and unlikely to have a significant impact on interest rate policy.”
Why does an economist get it that news like this is important when politicians don’t?
And, fortunately, good news could be on the way from the US and while it could lead to a stock market slide, I say “bring it on!”
Overnight, US consumer confidence came in at 101.1 rather than the economists’ consensus of 97, which is a big miss to the positive side. This led to the logical market player expert reaction from Peter Cardillo, chief market economist at First Standard Financial on CNBC: "The consumer confidence came in strong and that bodes well for the Fed to raise rates."
Right now, the Yanks and the rest of the world is on data-watch to see if the US Federal Reserve is set to raise interest rates in September. The big bets are for December, but since the Fed Vice Chairman, Stanley Fischer, made some comments, such as “the US job market is almost full strength” and other utterances, some smarties think the rate rise could be in September.
In fact, the US economy might be so good it might need two rises, with another in December.
This rate rise speculation could be ramped up on Friday when the latest US jobs report is released, with 180,000 jobs expected. This is a good number in its own right but, if it comes in bigger, then we could see the stock market slump on the news!
The stock market reaction to rate rise news speculation has been consistently negative, so when it happens I expect a substantial sell off but that will only be Act One in this new play for Wall Street and global stock markets.
After a short time, the positivity of the thought that the US economy is actually and unambiguously recovering lead to a bounce-back for stocks. And so I say, as loudly as possible, “bring it on!”
But I wish I had some media hungry political buddies with big mouths helping me spread the good word.
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