Not right now, maybe. But in the United States, the Federal Reserve is finally considering pulling back some of its stimulus, as it sees the American economy improving. American investors are a little jittery right now because not everyone wants that to happen straight away. But the bottom line is, the Federal Reserve is seeing the economy improve.
A Gallup poll from earlier this week also found economic confidence has improved. Applications for unemployment have also decreased.
Hold on a second. America isn’t the only country on the mend. Craig James, senior economist at CommSec, told SmartCompany this morning he’s seeing a number of improvements in financially strapped countries.
“America is just trying to get their heads around what the Federal Reserve is trying to do,” he says. “But this isn’t just limited to Australia.”
“We’re seeing money moving in and out of Japanese securities, the European Central Bank is committed to working out the European debt problems and Japan is trying to kick-start the economy.”
“I think the focus is just on getting the global economy moving again.”
No one is out of the woods yet, but the focus is on improvements. And we’re seeing it – that’s why the Australian dollar is going down…
We all love our online shopping from overseas, but we’ve enjoyed a high dollar for a while and now it’s time to come down. In fact, this isn’t a surprise – most major economists have said a dollar above parity won’t last for a while.
The fact our dollar is going down is more of a statement about the recovery in the United States than it is about our own economy. More investors are seeing improvement elsewhere, and our ‘safe haven’ status is losing ground.
However, investors aren’t getting as good of a return here now the Reserve Bank has cut rates to a low point not seen in five decades.
“As the dollar goes down, we’ll see foreign investors stay away because they’re more fearful,” says APM chief economist Shane Oliver.
But there are plenty of benefits for a lower dollar. For one thing, domestic tourism will increase, and exporters will be finally happy to start making more profit again.
Okay, fair enough, it’s all a bit sketchy. And no one is suggesting Australia is performing at its best. But as these economists point out, this isn’t a permanent problem. As the global economy begins to improve, we’ll start to see some domestic improvements as well – which will hopefully lead to people spending their money.
But that means we’ll probably have a few bumps in the road until the September election, when we’ll get more certainty.
Look for opportunities. As the resources boom ends, the services industry needs to come up with new ways to fill the gap. Investors will be looking for new ways to make money in the post-mining era – it’s a great time to be an entrepreneur.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
