Home > Aus Economy > Australia’s Two Speed Economy: People Down, Profits Up

Australia’s Two Speed Economy: People Down, Profits Up

Last week’s retail sales figures were below expectations. They actually tell us a few interesting things about the contemporary “state of play” in the Australian economy.

Adrian Rollins had a good article in The Australian Financial Review on the retail sales result. He stated that (AFR, 7 May 2010 p4)

The week outcome adds to evidence that negligible wages growth, rising fuel prices, higher interest rates and an end to government handouts have weighed on household spending

Rollins, I think the AFR’s leading scribe, also went on to add the March trade figures into the analytical mix too

ABS figures show a 3.2 per cent jump in imports overshadowed a 1.5 per cent rise in the value of exports.

Reflecting the shift in the drivers of demand to investment, capital goods imports climbed 1.6 per cent and intermediate goods shipments jumped almost 10 per cent, while the intake of consumer goods dropped 3.9 per cent

A shift from consumer demand to private investment means people down and corporations up.

We might call this another variant to Australia’s “two speed economy.”

One sector that has been doing well has been financial services, especially the big banks. From what I have seen Westpac and the Commonwealth Bank have achieved good profit results on the back of what appears to be a public policy induced housing bubble. Gouging customers also helps.

Investors and the banks up, home buyers, especially first home buyers, down.

That’s another facet to Australia’s two speed economy we don’t focus on; profits up, people down.

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Categories: Aus Economy
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