One of the key sets of numbers that we track here is consumer
confidence. When we’re showing clients how the economy is expected to
go, this is an important factor. Especially for the retail sector.
After all, no matter what upstream industries like wholesale trade and
manufacturing are indicating, getting consumers to open their wallets
requires them to feel secure about their short-term financial future.

The most recent data for Australian consumer confidence shows that
it’s dropping. The major reasons given for this were turmoil around
Greece’s position in the EU and sharp drops on the Chinese
stockmarket. Both of these are apparently making Australians feel less
secure.

Two points: One, Greece has been in the same position for 5 years
straight now. Two, the Shanghai index was up well over 100% for the
year prior to the ‘shock’ drop.

We don’t think that either of these two factors should have a strong
material impact on Australian consumer spending in the medium- to
long-term.

Any short-term bumps need to be seen for what they are: short-term.

One reason why we provide quarterly outlooks is to smooth out these
fluctuations that aren’t structural.

Both the drama around Greece and the EU and the Chinese stock market
need to be seen as primarily political events rather than financial,
and the expected on-going market impact should be read in this light.
The EU is not necessarily about the euro. It is about member states.
We fully expect Greece to remain in the EU regardless of the currency
it circulates within its own borders. China is not a free-market
economy. Whilst this is the direction its government is taking, one of
the Chinese government’s primary concerns will always be making sure
its citizens are content. Governing 1 billion content people is much
preferable to trying to govern 1 billion discontent people. If market
intervention is required to achieve that, it will happen.

In business it’s important to keep your eyes on the horizon and not
get distracted.

Of course we are always looking to see what longer-term trends are
hinted at from short-term events, but presently we’re remaining
confident about the local economy.

Contact us and make sure your business forecasts use the most
comprehensive economic data and industry sales projections.