Better (Be) Different

The Australians are doing quite well, at least according to more recent data. A few hiccups here and there, the economy Down Under has been riding high(er) on the Chinese rebound and the potential end to the pandemic. Yesterday, the National Australia Bank’s survey of the first quarter business environment was thoroughly positive. At an index value of +17, this was substantially higher than cyclical averages indicating a continuous upswing.

The survey is consistent with other indicators pointing to a rapid recovery in the economy in recent months, led by surging employment growth. Australia has largely contained the Covid-19 virus, allowing a more normal running of the economy to emerge.

Don’t count on the Reserve Bank of Australia to stand in the way, either. Central bank Governor Philip Lowe reiterated that monetary policy in his country, like nearly everywhere else around the world, will not be adjusted anytime soon even as normalcy finally seems within reach.

Lowe, as Jay Powell or Christine Lagarde, intends to allow inflation time to get hot and sustainably so – as the others, Aussie policymakers have been fooled by inflation-ish developments one too many times before. Their operative word is now “sustained.”

Over here in the US, Federal Reserve Chairman Jay Powell was delivered some likewise super news. The Department of Labor reported that initial jobless claims had fallen further last week from the prior week’s big decline. No longer is this crucial measure of labor market slack being sustained above pre-recession record highs; at 547,000 for the week of April 17, that’s down by 300,000 since mid-February and more importantly trending in the right direction.

Powell, as Lowe, has reiterated how he needs to see much more before the Federal Reserve will even think about flinching (no matter what other scattershot FOMC members might say about COVID vaccine rates and such). His word is “transitory” in that given 547k in jobless claims there’s still a long way to go for the labor market so any inflation which might show up over the next few months isn’t at all likely to be “inflation.”

Just temporary effects of base comparisons coupled with commodities, neither of those indicating the same goal of “sustained.” For once, he agrees with the inflation market.

1 2 3
View single page >> |

Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.