The credit crisis is hitting the fortunes of Australians hard, with the average person’s wealth falling by $12,100 to $237,000 in the last nine months as a result of the slide in property and sharemarkets.
The credit crisis is hitting the fortunes of Australians hard, with the average person’s wealth falling by $12,100 to $237,000 in the last nine months as a result of the slide in property and sharemarkets.
According to CommSec’s chief equities economist Craig James, average wealth has fallen by 3.6% in the last year – the biggest fall in Australians’ wealth in 17-and-a-half years.
“No one should under-estimate the impact of the global financial crisis on the Australian economy,” James says. “While significant fiscal and monetary stimulus is being applied to the economy, more efforts to boost activity will be required.”
James says the figure highlights the urgency and importance of the Federal Government’s $10.4 billion economic stimulus package, which will see cash handouts given to low and middle income earners and support for Australia’s struggling property sector.
But James says this package will need to be supported by further interest rate cuts in the coming months.
“The Reserve Bank will need to quickly move the cash rate from 6% to a more normal or ‘neutral’ setting of around 5%.”
And while it’s hard to see much to smile about when your personal fortune is disappearing before your eyes, we should take heart from the fact the wealth levels of Australians are still almost double those of a decade ago.
Let’s hope we don’t give too much more back over the next few months.
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