This is the headline in The Australian this morning.
Slowing economy boosts case for Reserve rate cut
The national accounts Data were released yesterday showing the dismal turn in the Australian economy. Things have been in a downwards descent for quite some time as data from business surveys, and especially my ACCI Survey of Investor Confidence, have been showing. You can hide it for a while but with the continuing switch from private to public direction of economic activity, the effect is to lower per capita real incomes. It’s slow and decremental but it catches up with you in the end. And this, goodness knows, is not the end.
Meanwhile the government is on its madcap chase to balance the budget using every approach but the right one. If you balance the budget by killing off private sector growth (monthly corporate tax payments, anyone?) you are missing the point since budget balance and higher public outlays is a pretty sorry outcome.
Rates will probably be cut since everyone now expects it but I suspect Glenn Stevens will be very reluctant to have done it. Lower interest rates are a problem, not part of the cure. Lower public spending, however, that would work but macro being the way it is, how is anyone ever going to find out?
Not the National Accounts: Occurred to me after I had put the post up that neither the story in The Australian nor the one in The Age mentioned the National Accounts which Milton von Smith points out will not be released until tomorrow. But let me again suggest that if you would like to really keep an eye on the economy, there is no better measure around (others may be equal) than the ACCI Survey of Investor Confidence which is about much more than investor confidence.