Yeah, I know members of the fourth estate have to come up with a story every day or week, (depending on your demands) but why do they nearly always have to be negative? Won’t we read something positive? Don’t we like the idea that things are miles better than expected, or that the trend is pointing to positivity?
I’ve always been interested in this topic and I told an audience of a 1000 IGA store owners during a speech on the Gold Coast on Monday, that I thought it was their fault! But I do agree with Bob Dylan’s sentiment in that great song Hurricane that “the newspapers, they all went along for the ride.”
The media mate I want to bring into this conversation is Fairfax’s Peter Martin, who is a quality economics commentator but he can tend towards negative issues. Okay, where I’m a glass half-full bordering on getting a smaller glass to make it full, Peter is definitely glass half-empty, like a lot of my media economics and market commentator buddies.
Pete’s latest story comes with the headline: “Income growth means Australian households are no better off than in 2009.” Peter says if you think things in your life aren’t great, despite good economic readings, then you are probably right.
Even before I read his argument, I knew his words would resonate with a lot of people like retirees (who use term deposits for wealth-building), anyone who can’t afford to buy a house where they want to live and are paying big rents living where everyone wants to live and people in WA who now are in a post-mining boom and so on.
But on the flipside, anyone who runs a tourism business, those with a huge mortgage (and once were on 7% mortgage rates but now pay 4.5%) and those who were unemployed after the GFC and now have a job are likely to think life is on a roll.
When Wayne Swan was Treasurer (under Kevin Rudd and Julia Gillard and then Kevin again) he talked about a patchwork economy and it was because WA, the NT and Queensland were on top of the world with the mining boom, while Victoria and New South Wales were struggling. The high dollar, which went to $1.12 US cents, hurt a lot of businesses and workers in those spaces. And what it shows is that when some Aussies are flying high, others fly low. It happens.
By the way, when WA was locked into the China-inspired boom, house prices were rising by over 20% a year for a few years on end and the average person in Perth had to eat a lemon each morning to wipe the smile from their face!
And their State Treasurer was a guy called Eric Ripper!
Anyway, back to Peter’s bad news story. Apparently, the Household, Income and Labour Dynamics survey (or HILDA for short), which tracks 17,000 Aussies, says we were better off between 2001 to 2009, with real disposable income up from $57,704 to $76,264. That was a cool 34% gain.
The GFC took household incomes down 5% to $72,260, as job losses, less pay rises and less hours of work were available.
Peter looks at a whole lot of indicators that basically prove his assertion that “Typical Australian families are no better off than they were five years ago.”
I reckon the survey has a certain validity for the average family, but you do have to be careful of statistics because say 50% of families could be worse off, 40% could be better off (say because of low interest rates) and 10% could be about the same.
Statistics can be insightful but they can be really misleading too.
My beef with a story like this isn’t about the actual revelations, as they’re useful observations. It’s about the residual impact on negativity, which affects confidence. And it really annoys me that no one in Government is out there trying to counter the negativity. I have complained that both Malcolm Turnbull and Scott Morrison didn’t sell the good aspects of our economy and our future.
Unemployment was supposed to go to 6.5% but is now 5.8% and peaked at 6.3%. Super returns have been over 7% per annum for over a decade, our economy is growing at 3% and the US economy is not even at 2%, interest rates are around 4.5% on average and most of us took out loans expecting them to be around 7% in good times and 9% in high inflation times.
But what really annoys me more is that we dodged a Great Depression bullet. When the GFC hit, expert economists tipped Great Depression Mk II but our unemployment rate topped out below 6%! US car companies and banks were bailed out by US Government policies and the Federal Reserve.
Thank God China was growing hard and effectively saved capitalism — that was a welcome irony that the world’s greatest communist state saved western capitalism and, possibly, made democracy look a lot better than it would have in a depression.
China was also good for our national economy with the mining boom and I don’t think many of us ever thank our lucky link to our most important trading partner.
All up, given that we have avoided the huge job losses, the bankruptcies, the bigger ballooning of budget deficits that a Depression would have brought, the collapse in house prices and the family destruction it also would have brought, we really are a bunch of whingers if we get too stressed about a slight fall in our standard of living.
I might be like the rest of us by not being grateful for small mercies but as an economist, who has a historical perspective, I do appreciate huge mercies and dodging a Depression was one hell of a big payoff that I can’t undervalue.
It’s time we all accentuated the positive. And who knows, the media just might come along for the ride, occasionally.
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