The Reserve Bank should be comforted by the latest data on home prices.
Price growth is slowing.
Hence, no change in official interest rates this month or maybe for some time to come.
Also, if this slowdown continues in earnest, it reduces the ‘hard landing’ scenario.
However, we stress, this is a watching brief.
Looking forward, the June-quarter GDP figures.
We think that we will see a meagre annual growth rate below the already shaky 1.7% for the year ending in March.
I keep hearing pollies and suits talking about our past economic achievements.
Anything, I guess, to distract our attention from the perilous state of the Australian economy.
One of the sectors that has helped bolster the economy in recent years has been construction, but that is now in decline.
It is a cyclical industry and it always runs out of puff eventually.
Next stop is an ‘infrastructure boom’; in short, more road works, which means even more debt.
For mine, the Australian economy looks shaky.
We have historically low interest rates; record-breaking and already disturbingly high household debt; housing prices that may or may not be part of a bubble, and the RBA is using one instrument to aim at six key goals (the Aussie dollar, economic growth, employment, inflation, house prices and household debt).
I don’t know what is in store.
But I do think we need more tools in the back of our ute and someone who can the actually drive the bloody thing.
Moreover, that someone needs to be prepared to take us over some tough and mighty unpopular territory.
To me, that is the only way home.
And thanks to Commsec and CoreLogic for map/chart.