object(WP_Post)#10220 (24) {
  ["ID"]=>
  int(46120)
  ["post_author"]=>
  string(1) "5"
  ["post_date"]=>
  string(19) "2019-05-20 16:10:46"
  ["post_date_gmt"]=>
  string(19) "2019-05-20 06:10:46"
  ["post_content"]=>
  string(4029) "

For many it came as a surprise, but regardless of how you feel about, the Coalition won the election and will be governing for the next three years. And it’s unlikely to be an easy three years, given the current economic predictions.

A Sluggish Economy

The domestic economy appears to be slowing rapidly, in large part due to extraordinarily low wage growth. To put it in perspective, wage growth has been weaker in the last six years than any time since World War II. We’re also experiencing one of our biggest property slumps following an unsustainable boom; an historically low inflation rate; and while unemployment rates remain low, underemployment is increasing.

This last point is crucial. While unemployment has remained low (despite the recent increase), underemployment is increasing and much higher at 8.2%. To be considered ‘employed’ one only needs to be in paid work for as little as one hour a week. Underemployment has been steadily rising over the past 40 years, with an increase in casual and part-time work, with more underemployed people than unemployed.

The reasons behind this increase are complex, but important for businesses to note. With stagnated wages, a property slump, and rising underemployment, it’s no wonder that consumer spending has taken a hit.

But it’s not all bad news.

The good news is that this possible economic slump is mostly home grown, which means it can potentially be remedied by strong economic policies. The Coalition win also means a continued government and thus hopefully more stability. 

In the lead up to the election, the core of the Coalition’s economic plan involved stimulating consumer spending by putting more money in taxpayer pockets by cutting taxes in 2020. Additionally, the Reserve Bank held its decision to cut interest rates earlier this month, indicating that they may have a more positive economic forecast than originally believed.

The relative weakness of the Australian dollar, combined with strong commodity* prices, and a robust global economy is good news for the domestic economy. It may provide the support for parts of the economy that need it going forward, especially as China continues to grow and their demand for Australian commodities increases.

What’s this mean for Aussie Businesses?

While we are experiencing an economic slump now, it doesn’t necessarily mean we are headed for dire circumstances.

If the Coalition can implement economic policies geared at stimulating the economy, both long & short term, it should encourage consumer spending and stimulate the economy.

Additionally, if the international economy and particularly China remains stable as expected, our exported commodity industry will continue to thrive and fuel domestic economic growth.

If we can reduce the rate of underemployment while maintaining the current unemployment rate, we can further stimulate consumer spending while stabilising the economy and improve the overall domestic outlook.

*Key Australian commodities include iron ore, gold, wheat, copper ore, coal, bovine meat, wool, aluminium, sheep/goat meat, wine.

" ["post_title"]=> string(55) "What the Coalition Win Could Mean for Aussie Businesses" ["post_excerpt"]=> string(0) "" ["post_status"]=> string(7) "publish" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(6) "closed" ["post_password"]=> string(0) "" ["post_name"]=> string(55) "what-the-coalition-win-could-mean-for-aussie-businesses" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2019-06-11 15:04:05" ["post_modified_gmt"]=> string(19) "2019-06-11 05:04:05" ["post_content_filtered"]=> string(0) "" ["post_parent"]=> int(0) ["guid"]=> string(37) "http://www.coxpurtell.com.au/?p=46120" ["menu_order"]=> int(0) ["post_type"]=> string(4) "post" ["post_mime_type"]=> string(0) "" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" }

For many it came as a surprise, but regardless of how you feel about, the Coalition won the election and will be governing for the next three years. And it’s unlikely to be an easy three years, given the current economic predictions.

A Sluggish Economy

The domestic economy appears to be slowing rapidly, in large part due to extraordinarily low wage growth. To put it in perspective, wage growth has been weaker in the last six years than any time since World War II. We’re also experiencing one of our biggest property slumps following an unsustainable boom; an historically low inflation rate; and while unemployment rates remain low, underemployment is increasing.

This last point is crucial. While unemployment has remained low (despite the recent increase), underemployment is increasing and much higher at 8.2%. To be considered ‘employed’ one only needs to be in paid work for as little as one hour a week. Underemployment has been steadily rising over the past 40 years, with an increase in casual and part-time work, with more underemployed people than unemployed.

The reasons behind this increase are complex, but important for businesses to note. With stagnated wages, a property slump, and rising underemployment, it’s no wonder that consumer spending has taken a hit.

But it’s not all bad news.

The good news is that this possible economic slump is mostly home grown, which means it can potentially be remedied by strong economic policies. The Coalition win also means a continued government and thus hopefully more stability. 

In the lead up to the election, the core of the Coalition’s economic plan involved stimulating consumer spending by putting more money in taxpayer pockets by cutting taxes in 2020. Additionally, the Reserve Bank held its decision to cut interest rates earlier this month, indicating that they may have a more positive economic forecast than originally believed.

The relative weakness of the Australian dollar, combined with strong commodity* prices, and a robust global economy is good news for the domestic economy. It may provide the support for parts of the economy that need it going forward, especially as China continues to grow and their demand for Australian commodities increases.

What’s this mean for Aussie Businesses?

While we are experiencing an economic slump now, it doesn’t necessarily mean we are headed for dire circumstances.

If the Coalition can implement economic policies geared at stimulating the economy, both long & short term, it should encourage consumer spending and stimulate the economy.

Additionally, if the international economy and particularly China remains stable as expected, our exported commodity industry will continue to thrive and fuel domestic economic growth.

If we can reduce the rate of underemployment while maintaining the current unemployment rate, we can further stimulate consumer spending while stabilising the economy and improve the overall domestic outlook.

*Key Australian commodities include iron ore, gold, wheat, copper ore, coal, bovine meat, wool, aluminium, sheep/goat meat, wine.

Tags:

Leave a Reply

Your email address will not be published. Required fields are marked *