Economy WAS doing well
The Aussie economy grew 0.7 per cent in the June quarter, which was a bit better than might've been expected.
Due to the base effect annual economic growth spiked to 9.6 per cent.
Meanwhile, the terms of trade were flying, up another 7 per cent, largely thanks to strength in iron ore and coal prices.
Last quarter, I mused that nominal GDP growth could spike to as high as 13 per cent year-on-year on the base effect.
Huh - try 16.4 per cent! - which was the highest level of nominal GDP growth since Botham's Ashes in 1981.
Some of these big numbers have been skewed by last year's low figures, and thus aren't very easy to understand.
A quarterly graph of Australia's GDP in current prices tells the story better, with the economy rebounding to expand to above pre-pandemic levels in the June quarter.
Of course, as we all know too well, most of the Aussie population has experienced lockdown conditions in Q3, so there will be another horrible contraction to follow in the September quarter.
It's important to recognise, though, that a massive amount of cashflow is being freed up for households in aggregate.
The household saving ratio remained very high, even in Q2, at nearly 10 per cent.
Therefore with about $1½ trillion sitting in household cash and deposits, and international travel effectively outlawed, the economy should come roaring back...whenever it is allowed to do so.
As for when that might prove to be...you'll need to dust off your crystal ball for that one!
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Housing prices rose 1½ per cent in August, with strong results for Hobart, Brisbane, Adelaide and Sydney, but a decline posted in Darwin.
