The R-Word
Anyone familiar with the West Wing knows all about the R-word. It doesn’t matter how close you are to it, how long you’ve been in it, or how afraid you are of it, saying ‘recession’ out loud is akin to saying ‘Macbeth’ in a theatre. But, as Ross Gittins pointed it out in the weekend Sydney Morning Herald, here in Oz we have a pretty sound economy. So why is the R-word on everyone’s lips and is it time we just stopped saying it altogether?
The Reality
Mr. Gittins, of whom I am an awkwardly large fan, points out the following. The situation in the US and Europe is far from dandy. Their budget deficits are starting to look like the Grand Canyon and they are getting further and further into government debt. In contrast, Australia is working with a completely manageable deficit, despite the fear-politics to the contrary, and has very little debt. The Big 4 banks are a Colussus of strength, the mining boom continues to, well, boom and employment figures are steady.
The Doomsaying
I have a tendency towards being the priestess of doom, so I can definitely understand where all the anxiety is coming from. I work in a cafe, and we are seeing less people than we did last year. My hometown, a tourist spot, is feeling the pinch of less Americans and Japanese tourists travelling this year. The slowdown in retail has been felt. But Gittins would suggest that all the doomsaying seems to ignore the trickle-down effect of things like the mining boom. Manufacturing, tourism, retail and hospitality are all feeling the pinch, but that doesn’t necessarily mean we’re heading for disaster, as long as the economy in general stays strong.
The Anxiety
Gittins has always been a big advocate for the psychology of economics- namely, that people’s moods are reflected in their spending patterns. It’s the same as the weather. If you’re in a good mood and things are going well, someone predicting rain is hardly likely to cause a blip in your day. If you’re having a rough one though, or feeling a bit down, the prediction of rain could send you into small sobs. It’s exactly the same with our spending patterns, whichg can have a further effect on our economy. The mood at the moment could be described as apprehensive, bordering on anxious. The US and Europe are concerning, we still haven’t quite shaken off the memory of the GFC and for the new generation of the workforce- Gen X and Y- this might be our first contact with a slackening in some industries.
The Positive Place
So what’s the best thing we can do about this whole conundrum? It would seem the best thing we could do for the economy right now would be to stop worrying about it so much. Economies by nature go up and down, and we can’t control that. We’ll be running articles about the best ways to save money, even in slower periods, over the next couple of weeks. It could end up that staying positive may be the most powerful financial tool you can find.
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