A slew of local economic statistics arrived this week, plus some influential opinion.

To summarise the stats – another big trade deficit, exports flagging, imports booming; retail sales looking stronger, YoY growth close to 7% (yes, Virginia, 6.6% actually); credit growth still unsustainably high, but household credit growth apparently slowing; business investment plans strong, due largely to the continuing resource boom; and so we go, wild boom in the resource and services sectors, near recession elsewhere, with inflationary pressure everywhere.

The influential opinion is that of the OECD. The Australian economy will slow, aided (if that is the right word) by the drought and also the series of interest rate hikes. We may be near the peak of the rate hike cycle, a judgment from which Henry begs to differ, as regular readers will quickly discern.

The news is surfacing out of Iraq at warp speed, and Henry’s Lexington has been keeping our readers well ahead of the curve. Lex reported on the Baker commission yesterday, and the al-Malaki/Bush diplomatic crisis today:

On the Baker report: “The bipartisan Iraq Study Group reached a consensus on Wednesday on a final report that will call for a gradual pullback of the 15 American combat brigades now in Iraq but stop short of setting a firm timetable for their withdrawal, according to people familiar with the panel’s deliberations”.

On the diplomatic crisis: “Lex cannot recall a similar “diplomatic debacle” when the scripted Summit dinner with King Abdullah, Bush and al-Malaki was abruptly cancelled – a fitting metaphor for the schism between the president and al-Malaki. Lex, who has extensive experience orchestrating such Summits, opines: “In the highly choreographed world of Summitry and protocol a no show and/or hasty cancellation should never happen!”

Read more at Henry Thornton.

Peter Fray

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