Confidence

This downturn in growth (can't say recession now) was largely brought on by a collapse in confidence. With so many people telling us the world was falling apart, particularly Kevin Rudd, we had no choice but to cement our wallets into our back pockets or purses into our handbag. This is despite Australia having a completely different circumstances to the USA and Eurpoe. This doomsaying then becomes self perpetuating and results in a whole lot more needing to be done to stem the decline. The fact that 0.4% growth has kept the word recession from being blazoned in big bold letters from the front pages of our newspapers is significant. "Only advanced economy not in recession" has a better ring to it but whether it's enough to bring confidence back is yet to be known. It certainly won't make it any worse.

I'm not getting all positive yet though. There's further slowdown already in the pipeline and the damage can not be undone so easily. Private capital expenditure is down and this will take time to pick up. Unemployment will continue to rise during the year and another easing is still a real possibility although two seems unlikely now and this is being reflected by futures prices.

We're not out of the woods yet and we may not have great export numbers next qtr to keep us above the line - particularly with the rest of the world struggling.