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It's been a good year, but you may not have noticed if you've been reading the mainstream press!

We're having a super year, but have you noticed it?!

Peter Switzer
21 December 2016

Let me ‘bore’ you for exciting reasons because I suspect a lot of important things are getting better, though a lot of people don’t actually know it right now. Like superannuation, economics can be unfairly tagged as boring but it’s really important for our hip pockets. 

That said, whether you’re feeling wealthier or positive on how the economy will treat you in the future can sometimes have a timing problem.

For example, I asked Mark Levy (my colleague at 2GB who’s hosting the station’s afternoon show over summer) if he thought the economy was going well, average or badly. Wisely he said “average” but others could have said “poorly”, given the negative economic growth number we saw recently. This encouraged negative types in the media to pull out the R-word for recession but few of these journalists/commentators pointed out that this was a September quarter number. 

We’re now closing in on Christmas and this was data from July, August and September. It’s old news. Last week, I looked at how the economy is actually going in the December quarter and got 14 good news data drops and three bad ones.

I also surprised myself in finding that some of the bad news I heard reported this quarter actually related to the September quarter. Negative news can leave incorrect impressions, even in the minds of someone like me, who analyzes economic data daily!

Therefore, in the interests of you having the full story, let me load you up with some super good news stories to take to your Christmas and New Year celebrations. Here goes:

  • The Commonwealth Bank Business Sales Indicator (or BSI, which is a measure of economy-wide spending) rose by 1.2% in November, after an upwardly revised 1.1% lift in October. Now get this: spending is now expanding at the fastest pace in 7½-years!
  • The annual trend growth in sales rose from 5.5% to 6.2% in November – the strongest annual growth rate in a year!
  • According to super fund watcher, Warren Chant: “After averaging 11% per annum over the past four years, super funds look set to deliver a fifth consecutive positive calendar year return. A gain of 1.1% in November propelled the median growth fund (61% to 80% growth assets) to a cumulative 5% for the first 11 months of 2016. And with share markets continuing to rise in December, the median return for the year currently stands at an estimated 6.3%.”
  • In The Australian today, markets editor David Rogers has the following to say about our stock market that underpins many super funds’ returns and influences the decisions of our major employing companies: “Australia’s share market is on track for its strongest returns in three years, after closing at its highest point for the year.
  • “Buoyed by gains on Wall Street and a pullback in the Australian dollar, the benchmark S&P/ASX 200 share index ended up 0.5 per cent at 5,591.1 amid strength in banks, utilities, consumer and real estate players.”
  • The Reserve Bank’s minutes for the December meeting suggested that interest rates are on hold for most of 2017. Views on the global economy were more positive and the RBA’s Board was expecting a softer growth quarter for September but this wasn’t expected to extend to the December quarter.
  • Most economists agree that the September quarter’s negative growth was a likely one-off blip for an economy that has been growing better than most western economies.

I could go on and tell you stuff, such as the median growth super fund has returned 12.8% in 2012, 17.2% in 2013, 8.5% in 2014 and 5.7% last year. And if Warren Chant is right, then we could see a 7% return by year’s end, which is an extraordinary story for our super fund assets, which, for many of us, could be our most-important wealth-builder!

Sure, January or February could bring a “we’ve gone too far with this Trump positivity” sell off for stocks but if economies respond to the shot-in-the-arm surge of confidence we’ve seen since Donald’s election win, then 2017 could be a more super year for the economy, stocks and general positivity.

Go Australia!

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