In recent months a raft of indicators has effectively been marking time. That is, they’ve been trending sideways.
Consumer confidence is certainly one of these indicators, hugging close to the 100 line that separates optimism from pessimism. Over the past two years the consumer confidence index has averaged 100.5.
Then there is the job market. Contrary to expectations, the unemployment rate has been hovering close to 5%, holding between 4.9-5.3% over the past two years.
Similarly for home prices. In January 2010, the average dwelling price was around 558,000. In August 2012, the average dwelling price was around 558,000.
And the sharemarket has also been marking time, with the All Ordinaries averaging 4,400 points over the past 18 months.
The two big questions are: what could shake the economy out of this lethargy; and is there a key lead indicator to watch.
The answer to the first question is global financial stability. And one indicator we watch is luxury cars, as traditionally it has been the “top end” of the market that drives growth.
Currently the rolling annual total of luxury car sales is the same level as it was five years ago. Luxury car sales accelerated out of the GFC but over the past two years, there has been no identifiable trend. It is a case of watch this space.
The week ahead
Another relatively quiet week is expected for new economic news in Australia. But the usual bevy of information will be forthcoming in the US.
In Australia, the week kicks off on Tuesday when the Reserve Bank releases its half-yearly Financial Stability Review. There is no doubt that the central bank will give the financial sector a clean bill of health. Consumers and businesses are trimming debt and reluctant to borrow.
As a result, bad debt levels at banks have eased. It will be interesting if the Reserve Bank focuses more on stress indicators though. There are plenty of reports that consumers and businesses are dragging their heels in paying bills.
Also on Tuesday, Reserve Bank assistant governor Guy Debelle delivers Deakin University’s 2012 Richard Searby oration in Federation Square, Melbourne. If the Reserve Bank wants to send up a smoke signal, this could be the opportunity to do so.
On Wednesday the Bureau of Statistics (ABS) releases its Social Trends publication which includes data on how Australians fare on health issues compared with other countries.