IS NIGH

WHILE AUS­TRALIAN CON­SUMERS HAVE THE MEANS AND THE WILL TO START SPEND­ING AGAIN, THEY CAN’T SEEM TO SHAKE A SENSE OF GLOOM. BUT THE FED­ERAL ELEC­TION MIGHT DO THE TRICK.

The Australian - The Deal - - Extra - BY BERNARD SALT

I HAVE A SIM­PLE, YET POW­ER­FUL PROPO­SI­TION: The com­ing fed­eral elec­tion will trig­ger a shift from the aus­ter­ity that has dom­i­nated con­sumer be­hav­iour since the global fi­nan­cial cri­sis. What lies be­yond, at some point, is a new era of ris­ing con­sumer con­fi­dence and re­tail spend­ing.

In the years since the GFC be­gan in 2008, Aus­tralian con­sumers have paid back debt and in­creased house­hold sav­ings. The national un­em­ploy­ment rate re­mains be­low 6 per cent, whereas at the peak of the 1991 re­ces­sion the rate ex­ceeded 10 per cent in most states. In­ter­est rates re­main at his­tor­i­cally low lev­els and the Aus­tralian dol­lar has hov­ered around par­ity with the US dol­lar for close to five years.

While a high dol­lar has a neg­a­tive im­pact on Aus­tralia’s abil­ity to sell agri­cul­tural and man­u­fac­tured prod­ucts, as well as tourism and ed­u­ca­tion ser­vices over­seas, it is nev­er­the­less viewed pos­i­tively by many con­sumers. We like know­ing “our” cur­rency is roughly the equal of the Amer­i­can dol­lar.

Yet de­spite what might be re­garded as a se­ries of good-news in­di­ca­tors, the mind and mood of the Aus­tralian con­sumer has re­mained fairly dour.

It is al­most the fifth an­niver­sary of the col­lapse of Lehman Bros. The worst of the Great De­pres­sion was over within four years andWorldWar II was done in six. Five years for a not-quite re­ces­sion is sen­tence enough. It’s time to move on, to be­gin the cy­cle that builds con­fi­dence and leads to the next boom.

The in­ter­val be­tween the peak of one boom (say, in the late 1980s) and the peak of the next boom (in the mid-2000s) was about 15 years. If that were re­peated pre­cisely, the next peak-spend­ing era would be around 2022.

But this is not my point. From a busi­ness per­spec­tive, it’s not the peak-to-peak tim­ing that is im­por­tant. It’s more im­por­tant to fig­ure out how long we have to wait for the be­gin­ning of the up­turn. Chief ex­ec­u­tives and boards want to in­vest in a ris­ing mar­ket, as op­posed to a fall­ing or stag­nant one. So if the next peak in spend­ing is around 2022 (based on peak-to-peak in­ter­val the­ory), when will the up­turn be­gin?

Af­ter the re­ces­sion of 1991 the mind and mood of the Aus­tralian pop­u­la­tion was might­ily sub­dued for some years. Syd­ney seemed to pull out of the dol­drums first, in 1994. The cat­a­lyst, I think, was be­ing awarded the 2000 Olympic Games in Oc­to­ber 1993. Sud­denly large-scale, govern­ment-funded ur­ban in­fra­struc­ture projects were un­der way. Within two years, Melbourne was start­ing to kick in, with projects such as CityLink, Crown Casino and what is now known as Eti­had Sta­dium.

By 1996, there was move­ment in both cities and that then spread to other parts of the na­tion. The in­ter­val from the worst of the re­ces­sion (1991) to the be­gin­ning of a con­fi­dent re­cov­ery (say 1996) was five years. The GFC did not have the same dele­te­ri­ous im­pact on the econ­omy as the 1991 re­ces­sion. The un­der­ly­ing eco­nomic in­di­ca­tors to­day are pos­i­tive.

Pop­u­la­tion growth has con­tin­ued at

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