I wonder, was yesterday's better than expected GDP figure a good enough reason to remind the world that a certain anti-Keynesian economist was warning about Australian stagflation in 2011?
I wouldn't be cheering just yet. The RBA will be back cutting rates in 2016 once the housing boom is exhausted.
Yes I know some service industries have seen strong employment growth, but that's just a second wind of the construction boom. We can't all be employed in healthcare and social assistance.
No, I'm not exactly "cheering", but it's still clear that 4 years out, nothing resembling "stagflation" has raised its head. And economic predictions need to have some realistic timeline attached to them - as I've noted here before, the laughable Laffer is prepared to take credit for a turnaround in Kansas even if it takes 10 years to arrive after the unwise tax cuts he advocated there to "jump start" the economy. I get the feeling that fellow ideologue Sinclair would do the same for any serious downturn in the Australian economy in the next 5 years. "See - what did I say in 2011!"
The other thing I would add - as I understand it, the figures reflect the benefit of the much weaker Australian dollar, and I have complained here before that the Right wing economists were never inclined to cut any slack for the Gillard government having an economy hurt by a persistently high dollar created by circumstances not within the government's control. In other words, their analysis is always ideologically driven, downplaying factors if they don't help their narrative, and claiming theoretic insights such as stagflation being "the consequence of following Keynesian economic policy" that don't come to pass.
Sinclair's opinion has nothing to do with what I wrote.
Tax cuts raise private sector disposable income. Of course they are expansionary.
The export figures tell us we are exporting shit loads of iron ore because the arse end has dropped out of the USD price. I also think the Chinese might be eating it. That huge investment boom we've had means we can export shit loads. The trouble is iron ore and LNG mining are capital intensive, production simply doesn't directly employ that many people when you take into account its share of national income.
Domestic demand is what matters and yet DFD growth was -0.5% in Q3 despite there being a huge housing construction boom.
Homer
The Kouk chops and changes. He'll be back forecasting cuts at some point next year.
What is the next growth driver? The housing boom is just about done. I give it six months.
Cheers for the offer to post, I should but I am far too lazy. Maybe I'll get off my arse and knock something up one day.
7 comments:
Stagflation can only occur if a highly regulated labour market react to a supply shock by maintaining or even increasing real wages.
Neither of those two events ever looked like occurring.
Indeed the labour marker became more flexible as the RBS have shown!
wow I missed the comment from the linked article of a probable recession.
Gee those Cataxllay types get it right all the time!
I wouldn't be cheering just yet. The RBA will be back cutting rates in 2016 once the housing boom is exhausted.
Yes I know some service industries have seen strong employment growth, but that's just a second wind of the construction boom. We can't all be employed in healthcare and social assistance.
No, I'm not exactly "cheering", but it's still clear that 4 years out, nothing resembling "stagflation" has raised its head. And economic predictions need to have some realistic timeline attached to them - as I've noted here before, the laughable Laffer is prepared to take credit for a turnaround in Kansas even if it takes 10 years to arrive after the unwise tax cuts he advocated there to "jump start" the economy. I get the feeling that fellow ideologue Sinclair would do the same for any serious downturn in the Australian economy in the next 5 years. "See - what did I say in 2011!"
The other thing I would add - as I understand it, the figures reflect the benefit of the much weaker Australian dollar, and I have complained here before that the Right wing economists were never inclined to cut any slack for the Gillard government having an economy hurt by a persistently high dollar created by circumstances not within the government's control. In other words, their analysis is always ideologically driven, downplaying factors if they don't help their narrative, and claiming theoretic insights such as stagflation being "the consequence of following Keynesian economic policy" that don't come to pass.
SDFC and the Kouk are going in different directions.
Hey SDFC would you a guest post outlining your views at all?
Steve
Sinclair's opinion has nothing to do with what I wrote.
Tax cuts raise private sector disposable income. Of course they are expansionary.
The export figures tell us we are exporting shit loads of iron ore because the arse end has dropped out of the USD price. I also think the Chinese might be eating it. That huge investment boom we've had means we can export shit loads. The trouble is iron ore and LNG mining are capital intensive, production simply doesn't directly employ that many people when you take into account its share of national income.
Domestic demand is what matters and yet DFD growth was -0.5% in Q3 despite there being a huge housing construction boom.
Homer
The Kouk chops and changes. He'll be back forecasting cuts at some point next year.
What is the next growth driver? The housing boom is just about done. I give it six months.
Cheers for the offer to post, I should but I am far too lazy. Maybe I'll get off my arse and knock something up one day.
Post a Comment