Figures released last week showing that Australia wasn’t in a recession took me by surprise. Maybe it was that $900 cheque from the Ruddbank that helped save the day? I think not! Maybe it was those statisticians playing with the parameters around how they calculate GDP (they have been playing with the CPI basket of goods for years, so why stop?!?)
My view is that the feeling on “the street” isn’t one of optimism and hope; reinforced by the fact that Australians are now saving more than what they have done for decades (aka: sticking cash into the piggy bank for a rainy day!)
So the question is; if Australia isn’t technically in a recession, will we have a recession (2 quarters of negative growth) in the next year or so? Remember we don’t live in a vacuum - most economies globally are inter-dependant.
On the basis that Aussie unemployment is set to rise to at least 8.5% by 2011 (if not more), there is a strong argument that the worst of this crisis is far from over.
I predict (and I really hope that I am wrong) the following:
1. The current global stock market rally is a “fools rally”
2. We will see another decline in the stock market later this year (October 2009 is my bet)
3. Big banks globally will air further dirty laundry
4. General Motors won’t be the last major global corporation to file for Bankruptcy
Therefore, if my predications are correct and analysts’ predications of 8.5% unemployment are correct – I will bet that Australia will technically be in recession at some point between now and the end of 2011. So my dear friends, keep saving for that rainy day!