Watch out for the first weeks in February for signs that Glenn Stevens and Ken Henry will enter election year with a curb on consumer over-confidence and pressures to jump all over imports.
The RBA is very likely to start a series of moves to “normalise” our economy and Treasury is certain to be planning to claw back every form of the cash splash other than promises to income security recipients.
As households note the 30% rise in the stock exchange, discussions of an Aussie return to full employment, albeit with room to convert under-employment into higher rates of full-time jobs, and a continuing surge in home sales, there is a belief by the regulators that Australia will need to encourage saving and actively discourage impulse shopping.
We have been lucky that a big decline in imports has cut Australia’s trade deficit at a time when the rising Aussie dollar has set a hurdle against export expansion. Local manufacturers and service entrepreneurs need to take this time to explore opportunities arising for import substitution and market extensions based on a strong domestic customer satisfaction base.
Smart companies will note the massive jump in Australian consumer confidence arising from the belief of most consumers that the Rudd stimulus package did deliver better than world average performance and that as a result now is a great time to go out and improve the quality of life at home.
The weekly Roy Morgan Consumer Confidence Rating has continued rising (up 1.1pts to 130.0) — now up three weeks in a row to start 2010. Consumer Confidence is close to its all time high reached in January 2005 (133.2), and is in fact the fourth highest ever recorded since Roy Morgan began polling Consumer Confidence in 1973.
“For the first time in nearly five years 50% (up 3%) of Australians say we’ll have ‘good times’ financially in the next 12 months while a high 59% (up 1%) of Australians say ‘now is a good time to buy’ major household items — the highest since February 2007.
Gary Morgan says that rising consumer confidence may add to speculation that the Reserve Bank will raise interest rates for a record fourth consecutive meeting when it convenes on February 2, 2010.
For those with a longer time horizon over the next two years, the key is to take note of the underlying drivers of the Henry Tax review – an emphasis on increasing productivity, getting people to stay in the work force longer and a shift towards a service economy that reflects the changing expectations of the ‘pig in the python’ – the baby boomers who are considering overseas trips on the basis of the rise in the value of the Australian dollar.
The volatility of elector reactions to “lack of action” by all governments will create an entrepreneurial climate for new services that target the household sector and home improvements.
According to the US Bureau of Labor Statistics, the aging-services industry composed of home healthcare, elderly and disabled services and community care facilities for the elderly make up three of the top 10 industries with the fastest employment growth. The Chronicle of Higher Education even named gerontology one of the “hottest” academic fields of the future. For instance, this fall, the University of Southern California debuted a new master’s degree in aging-services management to meet the growing interest in the field.
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Dr Colin Benjamin is an entrepreneurship and strategic thinking sonsultant at Marshall Place Associates which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.
Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099
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