Sunday, November 30, 2008

COLEBATCH: Don't believe anyone who won't tell you we're falling into recession

"The reality is that these forecasts are political. They are designed to buy time, offer reassurance, not to give useful information"

"THE OECD forecast that Australia's economy would experience modest but continued growth. Treasury agreed: there will be no recession, it said. And private forecasters agreed: the economy would slow but it wouldn't stop. The time was 1990.

In fact, Australia was already in recession. Yet the authorities told us we would escape it.

It is a bit of history we should keep in mind right now. Treasury, the Reserve Bank, the IMF, the OECD and most private forecasters are unanimous: Australia is in for rough times in the next year or two, but not a recession.

But then, they were almost unanimous in saying the same in 1990 — as Australia slid into a recession that left us with 11 per cent unemployment.

Why? In part, because even when forecasters know in their bones that a recession is coming, they don't want to be the one who delivers the bad news."...

Read Tim Colebatch's full article in the Saturday Age here.

Today,  as if to demonstrate that Tim is right, each of the forecasters is predicting positive growth in the September quarter figures to be released Wednesday.

A bit odd don't you think, that none say they are predicting a negative number even though three come close to it and one almost hits it.  I mean, how much closer to negative can you get than 0.0%?

The forecasts are below the fold:

Economists' GDP growth forecasts for the September quarter:

4Cast: 0.1

AAP: 0.2

ANZ: 0.2

Citigroup: 0.1

Commonwealth Bank: 0.3

HSBC: 0.2

ICAP: 0.2

JPMorgan: 0.4

Macquarie Group: 0.4

Moody's: 0.3

NAB: 0.2

RBC Capital: 0.2

TD Securities: 0.0

UBS: 0.3

Westpac: 0.1

Median Forecast: 0.2

Source: AAP