Saturday Sanity Break, 8 September 2018 - Economic sunshine
Annual rate of growth of over 3 per cent cheers the cockle of the hearts of Australian economists, those who have hearts that is. Result was largely due to strong consumption growth, and most people missed the fact that this growth was accompanied by another fall in household saving, now almost zero. With wages still growing at a tad over 2 per cent, and commercial banks cheerfully raising interest rates, there is an inevitable day of reckoning in the not-to-distant-future. Still, we should enjoy the economic sunshine while it lasts. It may last for another six months, giving Scomo and his team a chance at another narrow electoral win.
Scomo has been out and about - importantly, to the home of his football team, to Indonesia to kick the proposed free trade agreement into touch, to Albury to reprise am important meeting conducted by Bob Menzies forming the 'Liberal' party in 1944. Yesterday Scomo's Treasurer, Kooyong's own 'JoFry' shall we call him, cheerfully announced the economic sun was shining again, and at least he did not claim it was all his and Scomo's doing. However, Henry recall's Bob Hawke's stunning causing a bad drought to break, and in some of the drought-stricken areas there has been rain.
Coming on top of 400,000 new jobs it really does look as if the economy is responding to coalition management. Please note strong jobs growth is a consequences of low wages growth and most of these jobs are low productivity jobs. In Henry's list of policy proposals, posted in mid-August and linked below, it is noted that stronger wages growth will only happen when there is stronger growth of productivity. Economists have produced long lists of policies to increase productivity but policies to increase productivity are hard to achieve, as most such policies involve some short-term pain for some people.
Wage increases without productivity increases mean inflation, and the RBA sitting on its hands with monetary policy hastens the days when inflation re-emerges. Labor front bencher shadow ministers shriek about the iniquity of wages growth of 2 per cent while profit growth exceeds 8 per cent. RBA Chief Philip Lowe repeats his view that wages growth will pick up 'sometime soon', but with not much productivity growth, he may have to await a Labor win at the polls.
More here, including a policy list that seems to be either influential or the result of 'great minds thinking similar thoughts'.
Do not miss Greg Sheridan's article on 'America's uncivil war'.
Cardinal George Pell writes for Quadrant. His thoughtful essay is 'The future of the Church in a post-Christian age'.
Fiona Prior thoroughly enjoys director Jon M. Chu’s ‘Crazy Rich Asians’. More here
Henry was invited to watch Richmond play Hawthorn at the 'G' last Thursday night. Play? Real description is 'brutal warfare' that Richmond easily won. Then last night, Geelong played Melbourne, watched from the comfort of the TV at home, in front of a roaring fire - our answer to energy company gouging. Wonderful game, with the Dees crushing Geelong through smarter work and far greater energy. They get to play Hawthorn next Friday night in a game not to be missed.
The game between West Coast and Collingwood, also last night, was one for the ages. Was it twelve changes of leader, brilliant skills on show and a nail biting finish. Ten points down and it looked like Collingwood was going to win. But West Coast's stars, back from long periods injured, lifted their form dramatically and won the game by ten points.
Looks like a great final series is underway, gentle readers, so stay tuned.
Image of the week - Courtesy Google images