Why Aussies are refusing to accept the good economic news
Dear Australia, are you immune to good news?
I read last week that Aussies are ‘stubbornly’ refusing to accept the good economic news. That the Aussie economy is doing just fine.
And that those scaremongers with all their doom and gloom really need to back off.
Ok, you’ve got me. I’m paraphrasing a bit.
The mainstream press wouldn’t dare inject that much personality into their economic analysis.
But let me make this clear.
As someone who regularly analyses data, there’s a darn good reason why Australians are ‘immune’ to good economic news.
The numbers are a fairy tale…
Piranhas don’t like bananas, and other home truths
Let me tell you something.
I love a good work of fiction. There’s nothing better than hunkering down with a book and getting lost in a story.
Same with my kids. We currently have Piranha’s Don’t Eat Bananas on high rotation.
The story revolves around a piranha called Brian who tries to convince his flesh-eating mates that fruit really is the way to go.
But let’s be honest, we know it’s a work of fiction right? We all know that piranhas are meat-eaters.
Well, apply that same thinking to official government statistics.
They are a work of fiction.
Official government statistics don’t actually reflect what is really going on in the economy.
I mean, I’m sure they wish the numbers were true.
Let’s take the most recent unemployment data, for example.
The Australian Bureau of Statistics (ABS) says that in September, the unemployment rate dropped to 5%.
Now, that would suggest Australia is approaching full employment capacity. And that perhaps wage growth will begin to pick up.
After all, if everyone who wants a job has a job, employers will have to start paying more to attract that best staff.
At least that’s the economic theory.
But, if we take a look at alternative employment statistics provided by Roy Morgan, they say the current unemployment rate is much closer to 9.4% for that same month. That’s some 1.2 million people are looking for work.
Roy Morgan’s figure is almost double the rate of the ABS.
Why the difference?
Simple. The ABS consider that if you have worked for at least one hour – including if you worked that one hour for free for a family business or farm – you are ‘employed’.
Whereas Roy Morgan have a simpler approach. They ask: Are you in paid in employment?
The wide disparity between the two figures is why the ‘official’ data from the ABS should be regularly ignored.
The ABS data suggests that we’re all working away, happily employed.
Roy Morgan’s unemployment numbers look like they belong in a recession.
But hey, just remember, you’re supposedly immune to the good news.
Actual cost of living versus the fairy tale
Then of course, there’s good old inflation.
Now, consumer inflation data rarely surprises the market. It tends to come in very close to expectations.
And yesterday, the reading was 1.9%. That is, the percentage rate at which our living expenditures are increasing.
Which, once again, don’t reflect reality.
There is a huge distortion between the government data and the actual, cost of living experience.
And yet, the mainstream will eat up these numbers up, regurgitate them and tell you, everything is ok.
The reality is very different for people within the economy.
Show me someone’s whose personal costs increased at the inflation rate. I dare you.
The 1.9% statistic doesn’t match up with our personal experience.
I’ll volunteer for this experiment.
For example, this year alone, my personal petrol costs have increased 20%.
Then, I had a surprise 55% increase between my June and September quarterly electricity bills.
And somehow, the public school primary fees I pay have increased $20 for 2019…equating to a 12% jump this year.
To top that off, my rent has also jumped 4.5% this year.
Now, these are just my expenses. I’m not complaining about my costs. And I think it’s clear I need to find a new energy supplier.
My increased cost of living is many multiples of the supposed Australian inflation figure.
There is an enormous disparity between a smoothed-over selective basket of goods to represent the consumer…and the actual individual costs.
Lies, damned lies and statistics
The thing is, it’s not just tricky mathematics behind the inflation data anymore. It’s damn near sorcery.
Because my costs this year alone don’t reasonably align with the crummy data drop from our official statistics body.
You know what? I’ll bet your increasing cost of living expenses don’t match up with the 1.9% inflation rate either.
So, do you know why Aussies are immune to good economic news?
Because they don’t believe the numbers.
The economic data rammed down our throats from politicians vying for another position at their six-figure gig don’t remotely reflect the individual within the economy.
It’s not that we are immune to good news, we just aren’t stupid enough to believe the bullshit any longer.