Mark Bouris sat down with Peter Switzer on Switzer Daily to discuss the state of the Australian economy.
“The economy recovers when people feel as though they are wealthy again, that’s how Australia will start to boom again” – Mark Bouris
April 23, 2020
Global economies are going through an intense period of hardship as nations respond to the COVID19 health crisis.
Mark Bouris said that, in the long run, Australia’s economic outlook doesn’t look great.
“I actually think we’re probably heading for a worse situation than what we had in the GFC, because this is a consumer-led problem as opposed to a financial balance sheet problem like the GFC was,” said Bouris.
“So we know we’ve got to wait for people to get confidence back and get money back in their pocket before we recover.”
Bouris pointed to consumer sentiment as being the key ingredient to getting Australia up and running.
“The economy recovers when people feel as though they are wealthy again, that’s how Australia will start to boom again”, said Bouris.
“Recessions aren’t fundamental things, they’re sentimental things.”
“Growth, whether positive or negative, is a result of consumer behaviour. The way we behave is based on the sentiment around us. Right now, the major influence on consumer sentiment are things like the media, government announcements and your immediate friends and family.”
“For me, I work out what the sentiment is, based on what the government tells me and what the media tells me. I then check that out with people in my immediate sphere.”
Consumer sentiment put simply, “is an economic indicator that measures how optimistic consumers feel about their finances and the state of the economy.”¹
For Bouris, the critical cog in improving consumer sentiment is the unemployment number: “If people are gainfully employed, they feel like they’ve got something to do, they’ve got a purpose,” he said.
“The second thing is it means they’ve got money to spend. So gainful employment to me means Australia having an unemployment rate somewhere between 5.5% and 6.5%.”
“As soon as [Australia] gets somewhere within that range, I think we will start to grow steadily again. Until that comes, I think we’re going to drag ourselves along the bottom a bit.”
“So the question becomes: how quickly can this government AND businesses get our employees back, gainfully employed to bring the unemployment rate down?”
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References:
- https://www.investopedia.com/terms/c/consumer-sentiment.asp
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