News: The Recession is Over???

In the past few weeks there have been media reports that the recession is over.  Technically this is incorrect as Australia is not in a recession but market indicators released over the last week shows that the recovery may have started.  This is not limited to Australia with the US and Canada also coming out this week declaring the recession is over, but with some conditions.

The reserve bank was one of the first to come out and predict the recovery back in May this year with reserve bank governor Michael Stevens saying "The global economy contracted further during the first few months of this year. While the near-term outlook remains weak, there are further signs of stabilization in several countries." and "Conditions in global financial markets remain generally on a path of gradual improvement"

This was largely unreported by the mainstream media due to the closeness of the announcement to the federal budget.

The language in the most recent statement by The Governor has become increasingly positive in terms of the worldwide economy but contains warnings about jobs and interest rates increases to come.  Governor Stevens said "The global economy is stabilizing, after a sharp contraction in demand during the December and March quarters.  Downside risks to the outlook have diminished, with conditions in global financial markets improving this year and action to strengthen balance sheets of key financial institutions under way." and "Weaker demand for labor is leading to lower growth in labor costs. These conditions should see inflation continue to abate over the period ahead."

Adding to the experts consumers are leading the way into a stronger economy with the consumer confidence up to it's highest level since December 2007 and demand for residential mortgages increasing every month this year. 

Inline with all this positive news the Australian sharemarket has had a three week run of positive returns that looks to be continuing. The All Ords index closed last week at the highest level since October 2008.

The downside is not gone yet with pressure on jobs continuing with unemployment above 6% and predicted to climb further.

We hope the recovery is more than just talk.