Property Investment, Success & Money | The Michael Yardney Podcast Here’s 6 reasons why we’re optimistic about Australia’s economic recovery, with Dr. Andrew Wilson
Australia may just have side-stepped another recession by the skin of its teeth after recording a small uptick in GDP growth over the June quarter.
After an initial “miracle” V-shaped recovery, our economy did a U-turn as much of Australia was locked down at the end of the June quarter.
And economists seem united about the outcome of the current September quarter – we will be seeing a steep drop in economic output.
So what’s ahead for our economy and our property markets, that’s what I’m going to be chatting about with Australia’s leading housing economist Dr Andrew Wilson today. And while you’ll hear him give six reasons why we are optimistic about the economy moving forward, you’ll also hear why we won’t have the miraculous V shape recovery many were expecting.
Now if you have been a subscriber to this podcast for a while or followed my blogs or YouTube videos you’d know for the last 3 years I have recorded a weekly Property Insiders video chat with Dr Andrew Wilson. And his assessment of and forecasts for our economy and property markets have been remarkably accurate so whether you’re a beginning property investor or an experienced I’m sure you’ll benefit from my chat with Andrew today which is the audio of one of our recent Property Insider videos.
I’ll leave a link in the show notes so you can see all the charts that support the information we’ll talk about, but in general that won’t be necessary – Andrew explains his position well.
I’ll also be sharing my regular mindset message where I’ll discuss 5 common money myths and mistakes I’m seeing many people make.
There will be a lot written in our history books about the Coronavirus pandemic, how the world changed, how we live and the economic fallout that resulted from it.
Last year there were a lot of letters being tossed out about the shape of the economic recovery from the short sharp recession Australia experienced: U, V, W, etc.
There was even talk of a Nike swoosh shaped recovery.
Well, the recession we had last year was not a normal recession.
Government lockdowns and the fear of getting sick kept consumers at home, while the shutdown of supply chains, shortages of workers, the inability to source inputs, and the sudden fall in international tourism, students and migrants devastated businesses.
Then all of a sudden it looked like we experienced a V-shaped recovery marked by a steep, dramatic decline in the economy in the middle of last year (the first half of the “V“), followed by an equally rapid upturn to pre-recession levels, (the second half of the “V“).
But just look what’s happened over the last few months with half of Australia in lockdown at a time that many of the government supports measures we enjoyed last year not there anymore.
So, what’s next for the Australian economy and for our property markets?
These are some of the questions I’ll be asking Australia’s leading housing Economist, Dr Andrew Wilson chief economist of My Housing Market
Our economy lifts again and posts record growth over the year
Australia may just have side-stepped another recession by the skin of its teeth after recording a small uptick in GDP growth over the June quarter.
After an initial “miracle” V-shaped recovery, our economy did a U-turn as much of Australia was locked down at the end of the June quarter.
And economists seem united about the outcome of the current September quarter – we will be seeing a steep drop in economic output.
In today’s podcast Dr. Andrew Wilson gives 6 reasons why he’s confident about Australia’s recovery.
- Australia dodged a recession with strong economic growth over the last year.
Australia’s economy (as measured by gross domestic product GDP) grew by 0.7% in the June quarter after rising by 1.9% in the March quarter. Over the year economy grew by a record 9.6% – admittedly of a pandemic and use low base.
The level of the Australian dollar and the strength of our share market are a good indication of what’s ahead.
- Unemployment levels are low, and our participation rate is high
Australia’s economic recovery is creating jobs.
Interestingly the number of Australians working multiple jobs has never been higher, as insecure work surges.
The economy is creating jobs but not necessarily the ones Australians need.
The latest ABS figures have peeled back another layer on the labour market, revealing Australians are doing it far tougher than the headline number would suggest.
The number of people working multiple jobs surged by 15,100 in the three months to June to its highest number on record.
Over the last 12 months, the number of Australians with at least two jobs has swelled by 32.6%.
Headline unemployment fell to 4.6% in July, ahead of expectations and despite lockdowns coming into force.
As economists have pointed out, the ‘improvement’ has largely been the product of hordes of people giving up on finding work altogether, discounting them from the survey.
It shows in the fact that over the month Australians worked 3 million hours less.
At the same time, opportunities to get into the workforce are declining. On the back of eastern state lockdowns, new job ads have declined nearly 10% while total job vacancies hit a ceiling.
- Despite all the challenges consumer confidence is holding up well.
Strong consumer sentiment is important for our property markets and for our economy in general.
When we don’t feel confident about our financial futures we don’t spend, and in particular we don’t buy high ticket items like new homes or investment properties.
- Australians are richer than ever
Rising house prices and a stronger share market and increasing dividends from stocks mean Australians are richer than ever before.
- Aussies have stashed their cash
Over the last quarter the Household Savings Ratio eased from 11.6% in the March quarter to 9.7% in the June quarter, but thanks to lower mortgage rates and the raft of government stimulus measures rolled out over the past 18 months Aussie households are sitting on a record war chest of $1½ trillion in cash, so when we are let out of our Covid Cocoons we’ll be keen to spend it.
- Australians have wiped $1.1 billion from their credit card debt in a single month
A surprising financial upside to spending so much life indoors is that Australians have wiped $1.1 billion from credit card debt in a single month.
Coinciding with the first full month of NSW in lockdown, Australians have managed to pay off over $1 billion in personal credit card debt according to the latest Reserve Bank of Australia credit and charge card data.
It seems that as households settled into lockdowns in New South Wales and Victoria during July, they locked away their credit cards and began paying down their debts.
That saw credit card spending plummet 11.4 per cent to $19.5 billion in July.
The value of purchases dropped by 9.29% or $2 billion in July with the total value of purchases sitting under $20 billion for the first time in 9 months, while the number of purchases also dropped by 15 million from the month prior.
The lockdowns obviously offer limited opportunities to spend on credit cards and have prompted many people to prioritise paying down debts amid growing economic uncertainty.
Resources:
Dr. Andrew Wilson, chief economist My Housing Market
Subscribe to my weekly Property Insiders video chat with Dr. Andrew Wilson – www.PropertyInsiders.info
As our property markets move forward why not get the team at Metropole to build you a personalised Strategic Property Plan – this will help both beginning and experienced investors.
Get a bundle of eBooks and reports www.PodcastBonus.com.au
Shownotes plus more here: Here’s 6 reasons why we’re optimistic about Australia’s economic recovery, with Dr. Andrew Wilson
Some of our favourite quotes from the show:
“Another positive for our future is that Australians, in general, are richer than ever.” – Michael Yardney
“Becoming financially free is about your habits.” – Michael Yardney
“Money shouldn’t be feared, shouldn’t intimidate you – it’s merely a means to an end.” – Michael Yardney
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