The Green Shoots Round-up!

Posted 1 September 2009

We are by nature herd animals, skittish of prey, comfortable in numbers etc. This instinctive urge to move in large numbers, acting in the same way at the same time is especially apparent in finance and economics. Big market trends generally begin and end with buying or selling frenzies. Herding behaviour, driven by emotion, is mostly irrational – fear in the crashes, greed in the bubbles. But right now the herd is quietly grazing on the green shoots of a possible recovery. The worst global recession since the 1930s may be over and, while much weakened, national economies are starting to turn good. In an effort to spur the herd on I present to you the UBank international green shoots round-up.

Let’s start in the US where a report just out shows tentative signs of a stabilising housing market with the biggest jump in existing home sales there in years. Job losses are also slowing and most economists are tipping for US output to actually grow between July and September. And all this comes just as Ben Bernanke, the US Federal Reserve Chairman, suggests the US economy has nearly bottomed.

Over on the continent Germany and France, Europe’s two largest economies, have officially emerged from recession having recorded annualised growth rates of just over 1%. In the UK retail sales over the past three months are up 1.2%, the best result since May 2008.

Meanwhile, in our own neck of the woods, Asia’s emerging economies, led by China, have revived rather faster; in fact in the second quarter ’09 some of them have recorded annualised growth rates of over 10%. In the rest of Asia Japan has just moved out of recession, growing by 0.9% and South Korea GDP growth is strong and getting stronger.

Back at home the Australian economy remains resilient and exports are remarkably strong. In general, conditions are better than expected and business surveys and consumer confidence continue to rise. Construction work done in June shows a slower pace of decline and while unemployment will probably rise from its present 5.8%, it’s likely not to reach the May budget’s forecast of 8.5%. Plus with Goldman Sachs predicting a global commodity shortage on par with 2008’s to kick in next year the future is looking rosy for our already strong exports.

In other news …

Further to our interests in Burgernomics, a recent report from UBS offers an interesting insight into how long you need to work on the average net wage to earn enough to buy a Big MacTMacross 73 cities. Chicago, Toronto and Tokyo are the best places for fast-food addicts where it only takes 12 minutes’ work to afford a Big Mac while in Mexico City, Jakarta and Nairobi it will take you over two hours of hard toil for a fatty fix.