An Australian recession - not just yet

Heading into 2018, the US bull market run continues, the American price earning multiples are increasing but people are getting nervous but with the low interest rate environment and lag effects of the quantitative easing that poured large amounts of money into the financial sector - the risks increase. One expects US tax cuts to fuel the party for another two or so years - then what?

Down over the other side of the Pacific Ocean, the Australian index has not eclipsed the 2007 highs and although the Australian economy didn't melt down like the US or Europe as Chinese demand kept Australia from recession. Ten years on, the XJO, that is the S&P/ASX200 is sitting just over 6000 points still below the October 2007 high of 6700 points before plunging to just over 3000 in March 2009. No recession maybe, but we felt wealth destruction without the rebound but fortunately not on an American scale.

We still have soft conditions with low wages growth; the major concern to the economy being the high personal household debt. With non-mining business continuing to improve we are finally seeing increased business confidence. When we get some decent wages growth we should see improvement in the retail and services sector and increased jobs. The bright side is we don't appear to be hemorrhaging jobs anymore as jobs growth is improving; even if full-time jobs are being replaced with part-time work, at least an income is coming in. Easy to say for a person who maintained full-time employment through the whole GFC saga and beyond.