We’re living in strange times where good news on the economy isn’t great news for those with home loans and anyone wanting the stock market to start rising convincingly. As someone who’s pretty experienced with both economic and market stuff, the best advice I can give is — don’t whinge!

Seriously, no expert really knows what lies ahead but worrying about the short-term movements in stocks isn’t a wise pursuit. Provided you’re in good investments that have stood the test of time, eventually, good returns will return. And that’s a promise.

I’ll get back to likely returns over time in a moment but let me share the good news on the economy that could mean bad news for some.

The Australian economy grew by 0.9% in the June quarter to be up by 3.6% on the year. Ryan Felsman of CommSec reminds us that ‘normal’ GDP growth is about 2.25%, so our economy is rocking, which is something I’ve been telling you about for ages.

The rocking is so strong that in nominal terms, the economy grew by 4.3% in the June quarter and was up 12.1% on the year.

That’s huge but it is pumped up by a high inflation rate. When we look at economic growth, the ABS takes out the inflation surge to see what we really grew by but that 3.6% real growth is strong.

The worry about great growth is that it could mean inflation isn’t being reduced by the interest rate rises. Against that, you could argue that the July, August and September interest rate rises aren’t in those numbers, so the September quarter figures will be better for showing us how the rate rises are working to lower inflation.

The only worry I have was the fall in the savings rate from 11.1% to 8.7% but that was for April, May and June, and I’m sure there was a lot of spending after we got out of the Omicron lockdowns and borders reopened.

Over the next few months, we need to see data that says the rate rises of the RBA are working and, interestingly, Chris Joye, founder of Coolabah Capital who writes a well-read column in the Weekend AFR thinks the consumer sentiment numbers are of a recession-like level now in this quarter, which has to be good for killing inflation.

He also reminds us that monetary policy works with a lag, so over the next couple of months, we could see some really good indicators that suggest inflation is on the slide.

I hope so, as this will help the worrying home loan debtors and it will encourage stock prices to rise as these readings will imply fewer interest rate rises.

Back to what to expect from stocks once we see inflation fall and interest rate rises curtailed. Some economists even expect rate cuts in late 2023 but I hope they’re wrong as it will imply a bigger recession threat than I’m tipping.

For those worried about stock prices, let’s just look at the history of stock market returns:

• Stock market returns since 1985 are 8.10% after inflation!
• Looking at the S&P500 for the years 1992 to 2021, the average stock market return for the last 30 years is 9.89% (7.31% when adjusted for inflation).
• If you invested $100 in the S&P500 at the beginning of 1926, you would have about $1,066,955.03 at the end of 2022, assuming you reinvested all dividends. This is a return on investment of 1,066,855.03%, or 10.09% per year.

History says a good portfolio of stocks, at least as good as the overall index, returns between 8-10%, even taking out inflation. And it means, even if the bad news at the moment for stocks because of inflation and rising interest rates goes on longer than we all want, eventually very good returns are likely.

And considering the combined action of governments and central banks helped avoid a Great Depression of a 1930s kind, which would’ve smashed your portfolio, it might be fair to stop whinging and wait for the stock market to deliver as it always has.

It just needs you to be patient and understanding.