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What is the state of our economy?

Ask the question, and the response usually depends on the audience’s position. Their personal or political views, interests and agenda! 

And just when you thought it couldn’t get any worse, it’s reported that the International Monetary Fund (IMF) has warned Australia will have some of the rich world’s highest inflation this year - hours after the Reserve Bank of Australia warned it could raise interest rates to an 18-year high at its next meeting in three weeks.   

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• The Federal Treasurer acknowledges times are challenging. He has downplayed the nation's economic growth slump amid what has been dubbed a productivity crisis. It was reported that ‘he insists the Australian economy will improve next year despite warnings from global economic experts’. 

• The Prime Minister says he understands. He has assured his ministers as the Government battles a deteriorating economic outlook and voters react to worsening cost of living pressures. He again predicted that political momentum would swing Labors way when it counted. 

• The Reserve Bank of Australia (RBA) is fighting inflation within policy parameters. The RBA September meeting minutes blamed domestic factors for keeping underlying inflation elevated. 

• The Shadow Treasurer is reported to have said, ‘The Albanese government keeps pouring debt petrol on the inflation fire and families and small businesses are paying the price through rising interest rates and higher prices at the supermarket.’ 

   

• The IMF predicted Australian unemployment next year rising to a six-year high of 4.7 per cent, up from 4.6per cent in August, as economic growth slowed to 1.6per cent, down from 2.1per cent during the last financial year. 

• Small Business owner – drowning in higher costs. 

• Corporate Business confidence has taken a fresh tumble, according to a recent National Bank survey revealing higher fuel costs, as well as the outlook for interest rates, inflation, and the conflict in the Middle East, which pushed business confidence to a third consecutive decline in September. 

• Consumers say cost-of-living pressures are overwhelming.

• Everyday Australians reported as feeling less confident about the nation's economic future as they continue to be hit by rising interest rates, fuel hikes and plummeting house prices. 

• Householders – Mortgagees are struggling with interest rate increases.  

• Renters are battling to pay higher rents and face being locked out of homeownership.

• Pensioners – doing it tough, not keeping up. 

• And there’s more! 

Contributing Factors, Ingredients, and Outcomes 

• Housing market: supply and demand implications and market fluctuations. Property prices and demand are slowing in most states, influenced by recent tax rule changes. 

• New Tax Rules/Tax changes for negative gearing and capital gains. 

• Credit card surcharge changes suggested by the Opposition, as shifting the costs around the economy doesn’t make families better off. 

• Employment – opportunities or lack thereof. Unemployment is predicted to rise. 

• Business confidence: A lack of confidence affecting growth, investment, and expansion. 

• Consumer confidence influences discretionary spending. Spending demand is driven by generational preferences for needs, wants and essentials. 

• Politics and policies – Liberal, Labor, Greens and alternative parties shape us and our economy. 

• Impact AI – the best thing since sliced bread or the opening of Pandora’s Box. This comes with recent warnings from Westpac that a spending spree on data centres- the boom is now big enough to keep interest rates higher.  

• Immigration policy opinions depend on your political or personal views and, importantly, if or how it affects you. Rapid population increases can strain infrastructure, while economists argue that the more new arrivals, the better, to help boost the economy.  

If you are feeling overwhelmed by this economic reflection, take heart; it's not all doom and gloom! Look around; there are some good news stories. You and your Business may be one of them!

Examples:

A cult favourite yoghurt chain has opened 80 stores across Australia, including 13 now operating in WA. Loyal customers are queuing, the music is pumping, and it's a scene regularly played out. This popularity is attributed to a generational trend for wellness and connection during this cost of living crisis. According to the owner, it's more than just somewhere to grab dessert. He says his venues are designed as social places, particularly for younger people. 

And against all odds, new research shows that young consumers are returning to shopping malls. Nearly half of Australian Gen Z have increased their visits to physical stores over the past 12 months. 80% of respondents said physical retail created memories that online shopping could not replicate, while others said the in-store experience was as important as the product itself. More than purchasing, mallmaxxing is a spinoff of this retail revival. It's an occasion that includes lunch with friends, trying on outfits and sharing mirror selfies with the chat group.

Captured in the headline: Aussies set for sale splurge! Australians are expected to spend more this year during the Black Friday shopping bonanza. According to a retail platform giant, Australians are still willing to spend this holiday season but are putting more work into deciding what's worth their money! 

Take action now to ensure buyers come your way!

Optimism and Opportunity. Read our related article.

You are already planning, looking for opportunities, gearing up for the Summer Season, Black Friday promotions and Festive planning. Congratulations!