Economists predict a slump, but is anyone listening?
Looking ahead over the next week there are a number of economic releases which will influence the perception of our economy for the next quarter or so.
With economists opinions and forecasts having an extraordinary (given their collective ability to forecast incorrectly much of the time) degree of influence over some of the most influential political and business minds in the country, today’s CEDA conference will be interesting at least.
CEDA, according to the Financial Review, are forecasting annual growth rates this year of 2.2%, down from 4.4% in 1998. The key to the accuracy of this prediction lies in consumer and business confidence, which has to date stubbornly resisted declining in line with economist’s forecasts.
Retails sales for December are due for release next Thursday, and if Harvey Norman’s results are anything to go by are likely to fly directly in the face of predictions of an economic slump.
Today’s CPI figure doesn’t seem likely to upset any apple carts as far as interest rates are concerned, whilst tomorrow’s December Motor Vehicle Registration figures, whilst expected to be flat, are unlikely to forecast doom and gloom.
Building Approvals for December are due next Tuesday, the same day as the RBA Board meets. It would seem premature for the RBA to move rates in either direction at this stage, although we wouldn’t rule out a move closer to the middle of the year.
Maybe those economists, who for the last six months have been predicting the slump, are the same ones who so prematurely predicted the recovery from Paul Keating’s “recession we had to have” back in the early nineties.