Are you Confused?

As you know we’ve had two successive interest rate cuts. The first by 0.5% in May and now another of 0.25% for June. You’d expect to see home owners leaping for joy but what I’m noticing is confusion and maybe a little scepticism amongst consumers.

Something’s not right. The figures don’t tell the whole story.

For example, if you take a look at GDP and spending you’ll see that spending rose by 1.6% and that the economy has grown by 1.3% in the last quarter. That’s double what was expected and certainly doesn’t reflect the gloomy outlook reported by the media.

So what’s going on?

According to journalists and commentators house prices are reportedly down. Winter half yearly retail sales have fallen flat. The small business owners I know tell me that things are as tough as they’ve ever been.
We desperately need to restore confidence but what’s that old saying?? “Once bitten, twice shy?”
It seems to me that the GFC coupled with the European Economic Crisis has taught Australians to be thrifty. Only a decade ago we were being told we weren’t saving enough. Now we’re being told to stop saving and start spending.

Confused?

My advice is to forget all the mixed messages and simply focus on what’s happening in your own backyard. If you’re doing well and running a financially efficient household then you probably don’t need to worry.

If you’re thinking about buying a new home or a car or some whitegoods and you can afford them then now is as good a time as any to spend.

In really simple terms all we can do is make sure our income exceeds our expenditure. If you’re earning more than you’re spending then I reckon you’re doing well regardless of what the media, experts and the RBA might say.