The economy is bouncing back quickly… surprisingly quickly.
Ok, so this is my last look at the data before we break for Christmas. Let me tell you where I think we’re at.
The general point that I’d made is that we’re sitting pretty…
… and a lot prettier than we expected.
On pretty much every measure that matters, the data has come in above expectations in recent weeks.
It’s been nothing but upside surprises.
New Covid cases have come down quicker than expected. Home lending was better than thought. Building approvals were strong. Retail sales were buoyant. Car sales were booming. The trade data was solid. The unemployment rate was lower than we thought it was going to be.
To top it all off, the rebound in GDP was a solid sight better than most economists were predicting.
And, perhaps the most important statistic that matters – Covid fatalities – came in way lower than we feared.
Remember when they told us that the best case (the best case!) was for a fatality headcount north of 50,000?!
Currently it’s less than a thousand (thank our stars).
So, that’s a pretty impressive list.
The key thing here though is not just that the numbers were strong – it’s that they were surprisingly strong. They were stronger than expected.
And that means that the economy is tracking better than we thought, and recovering more quickly than we anticipated.
As such, it looks like we’re sling-shotting into 2021 at a phenomenal pace.
And all that positive economic data is going to meet a consumer who’s feeling on top of the world. Westpac Consumer Confidence is the best it’s been since the post-GFC rebound…. already.
That’s actually a phenomenal rebound out of a pretty dire situation.
It’s taken just 8 months for consumer confidence to fully bounce back. It took over a year during the GFC, and three years during the 1990s recession.
Now personally, I expect this is simply a sigh of relief. When you were expecting a headcount in the hundreds of thousands, it’s got to feel pretty good to realise that we’re going to be ok.
So that’s got to be influencing the numbers.
But still, it points to a consumer, sitting on a stash of savings, who’s in a mood to party.
And finally, 2020 has one more surprise in store for us – a commodities boom.
On the back of escalating trade tensions with China, iron ore prices have rocketed.
If they remain elevated, some analysts expect we’ll see an income boom that makes the 2010s mining boom pale in comparison.
And of course, you’ll remember that the mining boom was one of the big drivers in the last property super-cycle.
And so that’s where we’re at. The economy is bouncing back at an incredible pace, consumers are jubilant, and we’re on the cusp of another mining boom.