Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go Hmmm...one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Monday, 11 July 2016

Misery?

Woe!

A blog reader told me last week that apparently Australia's "misery index" is rising fast!

Yikes!

I mused this for a while, but then thought that it sounded suspiciously like rubbish.

So I ran some numbers.

The concept of the misery index was first coined by economist Arthur Okun, and is calculated by adding the seasonally adjusted unemployment rate to the annual inflation rate.

Therefore, in theory at least, it tracks how tough life is for the average citizen.


As I suspected - it was rubbish. The index has been falling. 

With good reason, Okun's misery index attracted some criticism for being somewhat over-simplistic.

In the late 2000s economist Steve Hanke created a modified misery index, which added the unemployment rate to the annual rate of inflation and the interest rate, less the annual growth in GDP per capita. 

A similar concept, but in addition to unemployment and cost of living pressures, it also takes into account the rate of interest, which is a factor that impacts most homeowners these days. 

I've used the cash rate here - but you can equally use mortgage rates, and the line plots a very similar path.



Any reading in single digits is a remarkably low result. 

Of course, Australia has low interest rates, low inflation, and, recently, a falling unemployment rate.

Meanwhile GDP per capita growth is tracking at a very healthy 1.7 per cent. 

Hanke's modified misery index is at its lowest level on record.