Friday, October 31, 2008

"No economist can explain what's happening"

Michael Blythe at the Commonwealth Bank:

"Forecasters are taking the axe to their growth projections for the Australian economy. Some commentators have gone as far as putting a recession as the base case. We have been down this path before. In the current climate it is easy to see why. Some of the major economies are slipping into recession. The financial turmoil continues. Extreme policy measures are being put in place. Business and consumer confidence has collapsed.

No economist can explain how stock markets can trade through a 1,000 point trading range in a day. Or how currencies can move through a 5-6c trading range in a day. These moves have nothing to do with the economic fundamentals.

But the fundamentals do matter. And when you run through the fundamentals relevant to the Australian economy they suggest we are better placed than most to deal with the global negatives... The economy will grow somewhere in the low 2’s over the next year or so. Unemployment will rise as a result. But inflation will slow. It may be a weakish result by our standards. But it is not a recession. And it will look pretty good relative to many other economies."

And Craig James at CommSec:

"The number of people filing for unemployment benefits in Australia hit record lows in September. Didn’t hear about it? That’s because the media chose not to report it. The data released by the Department of Education, Employment and Workplace Relations last week showed that there were just under 284,000 people claiming unemployment benefits – the lowest level in a data series going back over 20 years."

HT: For more pictures like the one here, check out the Brokers With Hands On Their Faces Blog - really!