See the world through the eyes of an economist.
High-risk lending remains low
The share of lending going to loans with a debt to income ratio over 6x remains low by historical standards. Show this to people who are waiting for the market to ‘crash’. There’s little risk in the system.
Inflation getting too ‘slow’ for comfort now
The monthly inflation data – which isn’t the entire picture so should only be used as a guide to the ‘actual’ quarterly numbers – surprised to the downside in May. The year-ended trimmed mean measure fell a substantial 0.4 percentage points to 2.4%. That’s under the RBA’s forecasts, and below the mid-point of their target band. That equals rate cuts.
Infrastructure still piling up
Engineering work done and in the pipeline looks like it is peaking, but remains at very high levels. A lot of this is transport infrastructure, which has big implications for the property markets that stand to benefit.
Dole numbers creeping up
While the official unemployment rate is steady, the number of people on Jobseeker is steadily creeping up. The labour market isn’t as strong as it seems. Equals rate cuts.
But globe is happy
But internationally, things are looking better (wars aside). The number of positive data surprises is above average, while the number of inflation data surprises is below average. Things are a little better than economists predicted.
Coffees are going to $12 each
Finally, some in the industry reckon this is the new break even point for a cappuccino. Whether people will pay it is another question. But what is definitely true is that coffee bean inflation has been running well ahead of CPI inflation for the past ten years, and is only getting worse.
And that’s how the world looked through the eyes of an economist this week.
DB.