Once the shock sets in for the losing side of government, the outgoing team starts to understand what happened to put them on the losing side.
The realisation that their voting citizens see everyday life through a very different lens, basically not through the blacked out windows of a government chauffeured limo, the newly-elected government leaders have the chance to align new policies with the majority of the voting citizens’ views of everyday life.
Most voters view their well-being through their daily, weekly and monthly shopping needs. You can’t go shopping for fun stuff if you have mouths to feed and haven’t got a job. You can’t buy big stuff if you’re in your late 20s and still living with your parents.
In the UK there are wealthy, happy shoppers in London and the South East and much poorer, unhappy shoppers in the regions. It’s similar in the US, with New York and Washington DC showing wealthy and happy shoppers with much poorer shoppers in the regional areas. For the avoidance of doubt in ALL citizens’ minds, jobs plus housing equals confident shoppers. And confident shoppers make a strong economy.
It’s been several months since the shock of the Brexit vote. The stock markets and the British Pound tumbled for several days as the world believed that the UK economy, and retail, would collapse. The stock markets recovered, the Pound has remained low, but no continuing collapse has happened.
Last week, after the announcement that we have a new and unexpected leader of the free world in Mr Trump, the Asian, European and US stock markets all dipped, but this time for only a few hours, then bounced back. There’s been no collapse. The second message of change in a major economy hasn’t rattled the world’s population this time.
Six months after Brexit, research jointly commissioned by KPMG and the British Retail Consortium showed UK shoppers increased spending in October. Retail sales increased by 2.4% on the year, the strongest rise since January and an indication of positive sentiment among households. Spending on food rose by 1.5%, even as food prices continued to fall.
That’s ALDI and LIDL continuing to grow share with lower prices for everyday items. All of this indicates that shopper confidence is behind the improvement, assisted by the shift to quality that is becoming evident, especially in clothing.
The low Pound is also helping with tourist shoppers buying more from UK retailers, both physically and online. And the good stuff too, reinforcing that shift to quality.
The research author Richard Lim, from Retail Economics, noted that: “The collapse of Pound continued to attract a rising number of international shoppers who drove higher demand for luxury goods, particularly jewellery and watches.”
So what will a Trump-led economic policy do for retailers in the US over the next 12 months? Well if he cuts corporate taxes, spends up big on big roads, big rail, big new buildings and big renovations, he’ll push more money, and more higher paying jobs for young and middle aged citizens, back into the economy.
We should see the strong consistent jobs growth throughout this year accelerate, retail spending increase further, and finally see some inflation. Then shoppers can choose to trade up, and retailers and manufacturers can choose to take price increases.
So where are we in Australia today? We’re behind the Pink Ball on the UK snooker table, and the 8 ball on the US pool table. The National Australia Bank business survey for October showed the measures of shopper confidence and business conditions in decline. The business confidence level is at an 18-month low.
But the NAB report isn’t alone. Westpac and the Melbourne Institute shopper confidence report also reported falling household confidence. Our retail sales growth isn’t too flash either. We’ve a way to go yet.
So when we will we have confident shoppers driving our economic growth? My gut feel is that it won’t be driven by political change.
We’re pretty lazy when it comes to the ballot box. Instead, as the UK and US pursue successful new economic growth policies, Australia and our Northern neighbours China, will benefit from their growth.
The stuff that comes out of our ground will increase in value, mining and minerals will start to invest in new plant and new jobs and that’ll overlap with our continuing infrastructure, as well as a farming and tourist boom. We’ll have the wonderful, unearned good luck that has defined our nations wellbeing for the past 200 years. Strong jobs growth and new housing will create happy shoppers.
Oh, and did I mention that happy shoppers do a strong economy make?