Rate cut, what rate cut? The Reserve Bank ended 2015 more confident about the economy than it started. The economy is burbling in low gear, but not fading; employment is much stronger than anyone thought; the terms-of-trade collapse is continuing; the mining investment-boom collapse is continuing; banks have put up mortgage rates; the housing boom is continuing, without a bubble; household consumption is solid; car sales are at near-record levels; inflation remains low, real wage growth is none existent; unit labour costs are under control; business profits rising; shareholders are being paid billions by cash-heavy companies to shut them up and stop them moaning.
All this for an economy that was in dire straits and in need of more rate cuts and attention, with all sorts of busts, "income recessions", forecasts of collapses (property, household debt) from economists and others far and wide and with access to email, a spreadsheet and the internet. These dominated the pages of the Financial Review, the Oz and the Fairfax semi-tabloids, and nothing happened except the economy slowly improved. Yes, the federal budget is in trouble and reform is needed, especially on the revenue side, and while we are not out of the woods yet -- and won’t be for a year or more -- the economy is in pretty fine fettle with a month to go in the year. -- Glenn Dyer