As the 27 European leaders reach yet another agreement on the bailout of banks and kicking the can further down the road, leading companies will be making the most of lower fuel costs and increased willingness of big spenders to go out and shop.
European Commissioner for Economic Affairs, Olli Rehn, said he expected leaders would agree on new growth measures, as well as on action to reduce borrowing rates for Spain and Italy, which are approaching unmanageable levels.
“I expect that there will be a decision on a further step towards rebuilding the economic and monetary union,” Rehn said shortly before the summit began. “We also need concrete decisions on a short-term stabilisation of financial markets, especially sovereign debt markets.”
No matter the reality of good economic news, low interest rates and the rest of the Swan mantra, the nation is clearly divided into those that want to believe that they are going to be impacted by the carbon tax next week and those that have had cash put into their bank accounts and are ready to go out and spend it.
A close study of the last couple of years of consumer and business sentiment shows some very interesting patterns. The hip pocket nerve is alive and well with big spenders feeling financially stable, very confident about the economy and heading for their wealth management advisors.
When Morgan Research asks big spenders about their level of confidence, seven out of 10 say they are very confident or confident. Four out of 10 light spenders say they lack confidence.
Small business owners indicate that while they are generally big spenders they do not believe that the Government is doing a good job running the country or that the economy is improving.
When the big spenders are broken down in terms of their voting intention there is a strong bias towards voters who do not support the current government, feel financially stable at the moment and have recently increased their savings profile in the face of the threat of that great big tax, etc.
Workers who describe themselves as self-employed are much more likely than the rest of the population to be big or medium spenders, vote for the coalition parties or the Greens and share the view that the Gillard Government has lost its way.
Light spenders, by contrast, tend to be less satisfied with all of the major parties, disagree that the Australian economy is improving, and certainly do not feel financially stable at the moment.
This leaves government supporters (ALP) as a minority that believes that the economy is improving, the government is doing a good job running the country and above average levels of consumer confidence.
Again, it is significant that owners, partners, proprietors and members of boards of management are much less likely to accept that the Australian Government is doing a good job running the country, lack business confidence but have not curtailed their own spending patterns.
Those that have cut down their own personal spending patterns are the public servants and those that do not feel financially stable in the face of reports of labour market dismissals.
After July 1 and the end of the current focus on asylum seekers there will be a steady return of business confidence as one side sees Tony closer to his desired destiny and the other side decides that supporting Julia is the best path to promoting stability and rising consumer sentiment.