The state of the economy at the street level

[Dona Ferentes]

"The value menu that we've recently tweaked in the U.S. to be $3 and under is actually over-indexing a little bit with consumers"
- David Gibbs, CEO, Yum! Brands

"We are seeing, that particularly among the low-income consumer, there's some transaction size reduction that we're seeing. We're also seeing some trade-down there”
- Christopher Kempczinski, CEO, McDonalds Corporation​

 

[moXJO]

Seems the ar5e end has fallen out of the thot market, but the born again Christian market is increasing.

 

[JohnDe]

Victoria may be the anchor around our neck.

In December, Victorians who are not under rent or mortgage stress were spending at the national rate. Then in January they suddenly began to cut back.​

​

The spending reduction momentum is gathering speed and those under financial stress are now cutting even further and seeking more outside help. Later, I will detail the reasons, but one event turned the tide — a complex property tax.​

Victorians are cutting back and it’ll be a nightmare for the RBA

For most of 2023 the nation was waiting for Victoria to collapse under the weight of its high government costs, irresponsible borrowings and unrestrained spending plans.
But our second largest state by population held up remarkably well for the whole year. Now, in the last few weeks, Victoria has cracked.

In December, Victorians who are not under rent or mortgage stress were spending at the national rate. Then in January they suddenly began to cut back.

The spending reduction momentum is gathering speed and those under financial stress are now cutting even further and seeking more outside help. Later, I will detail the reasons, but one event turned the tide — a complex property tax.

Other states and the Commonwealth should learn the Victorian lesson.

As my regular readers know, over the last couple of years my network has been very accurate in picking national retail spending changes. This is the first time the network has passed on a state change in such a short time so, while its untested, it is my duty to pass it on. Nevertheless, I am confident as to what is now happening in Victoria. It will be a couple of months before this January-February Victorian setback seeps into the official figures.

Nationwide during 2023 those under financial stress cut back their spending sharply and this created a decline in the overall market, which was accelerated by bad weather in the final two months. But, retailers who were smart in selling to the 60 or 70 per cent of Australians who are not under financial stress avoided most or all of the overall setback.

Myer and JB Hi-Fi’s traditional business are examples of groups which held sales in the December half year, although costs rose. Good Guys’ (owned by JB Hi-Fi) sales fell 10 per cent.

My network tells me the Victorian spending reduction is gathering speed. More of those under financial stress are seeking outside help.

In 2024 the 2023 situation continues in all mainland states apart from Victoria, while Western Australia in particular is booming.

This is a nightmare situation for the Reserve Bank trying to set national interest rates.


A series of taxes brought in under former Victorian premier Daniel Andrews are partly to blame. Picture: Asanka Ratnayake

As well as the property tax, the Victorian government in 2023 began a desperate series of new taxes it justified for all sorts of reasons rather than the true one — “we don’t have enough money and our astronomical debt is now costing us a fortune”.

The taxes were ingenious and aimed at business. They included a solar and wind tax on farmers; a container tax on importers and exporters; an education tax on private schools; a tourism tax via Airbnb homes and a health tax on general practitioners. They even tried an electric car tax but it was thrown out by the High Court.

All these taxes are passed on to consumers and hit Victorians in every sphere. History tells us such taxing sprees often occur when voters elect a government which hires large numbers of public servants but does not have sufficient talent, skills or money to undertake its agenda.

When such governments attack property they attack the heart of community wealth and confidence.

Victoria is very close to China and should have learned from the Chinese how important property has become in modern societies, whether they be dictatorial or democratic.

Victoria already had a land tax on second homes including holiday homes. But, the government dramatically increased these taxes, subject to a complex series of rules.

Large numbers of people had properties which fell outside the exception rules so were taxed extremely heavily, adding to their council rates, maintenance and interest.

Those with more expensive second homes on the Mornington Peninsula, Surf Coast and other areas concluded “enough is enough” and large numbers put their property on the market. Not only did their expensive homes fall in value, but many couldn’t be sold.

This had a chilling impact across the Victorian landscape because affluent Victorians heard the dismay of their friends and realised what they had counted as a stable asset was no longer saleable at anything like previous prices.

The confidence decline spread rapidly and retail spending was impacted.

There are warning signs in other states who can learn from the Victorian mess.

Meriton’s Harry Triguboff is so frustrated with the NSW planning and approval bureaucracy he is considering abandoning building in Sydney. Brisbane is completely dominated by the CFMEU and costs are out of control. WA builders are handing out 25 per cent pay rises like lollies with no productivity gains.

The Victorian government public service ballooned in the boom and there are now at last some retrenchments but not nearly enough and they are not always well targeted. I was recently yarning to a beaming retrenchee who pockets the money and knows his skills will be in demand elsewhere — perhaps even by the Victorian government.

Meanwhile, what compounds the impact of the Victorian property, health, solar, wind, education, tourism and container taxes is the feeling of hopelessness. There may be more taxes in the pipeline.

The ALP in Victoria is funded mainly by the CFMEU and the union can see a decline in major projects, so demanded a long term source of employment — whatever the cost.

The government has chosen a $120bn-plus so-called “underground suburban train to nowhere” project.

What it should have done was to use outside capital and sensible planning rules to harness dwelling development for its abundant land, serviced by infrastructure.

The state does not have the skills nor labour base to do both and does not have the money to pursue the “train to nowhere” project without enormous debt.

Victoria is sadly headed towards more borrowing and taxing. Federal intervention may be required.

Normally in such situations the Opposition party prepares for government but they have decided to have an internal squabble which extends to court battles.

 

[InsvestoBoy]

Victoria may be the anchor around our neck.

In December, Victorians who are not under rent or mortgage stress were spending at the national rate. Then in January they suddenly began to cut back.​

​

The spending reduction momentum is gathering speed and those under financial stress are now cutting even further and seeking more outside help. Later, I will detail the reasons, but one event turned the tide — a complex property tax.​

Hi John,

I read the quoted article but it's unclear why Victorians cutting back is "a nightmare situation for the RBA"?

The article just consists of some dude bragging about his insider numbers and his personal opinion of the state government fiscal and infrastructure policy.

Can you help us understand?

 

[JohnDe]

Hi John,

I read the quoted article but it's unclear why Victorians cutting back is "a nightmare situation for the RBA"?

The article just consists of some dude bragging about his insider numbers and his personal opinion of the state government fiscal and infrastructure policy.

Can you help us understand?

From previous examples in history, I take that it means; if the RBA detects that the national inflation rate is too high the decision to lift interest rates could be the nail in the Victorian economic coffin, which in turn becomes the anchor around the neck for all the states. Vicotria is in worse shape than the other states.

The RBA has indicated that the inflation rate is better, at the moment, but not perfect. a rate rise may be on the cards. A rate rise diminishes disposable income, Victorian sales figures show a decline in disposable income, a rate rise might knock the state over.

The RBA nightmare? Raise interest rates and knock the stuffing out of Victoria, which could snowball to the other states. Or let inflation go higher with the hope Victoria comes back online early enough to allow an increase later on, but if that fails Australia's economy is slammed by too high inflation.

 

[moXJO]

Hi John,

I read the quoted article but it's unclear why Victorians cutting back is "a nightmare situation for the RBA"?

The article just consists of some dude bragging about his insider numbers and his personal opinion of the state government fiscal and infrastructure policy.

Can you help us understand?

Whats to understand?
Victorians are at risk of moving out of state and annoy the rest of the nation.
RBA understand the dire implications.

 

[InsvestoBoy]

From previous examples in history, I take that it means; if the RBA detects that the national inflation rate is too high the decision to lift interest rates could be the nail in the Victorian economic coffin, which in turn becomes the anchor around the neck for all the states. Vicotria is in worse shape than the other states.

The RBA has indicated that the inflation rate is better, at the moment, but not perfect. a rate rise may be on the cards. A rate rise diminishes disposable income, Victorian sales figures show a decline in disposable income, a rate rise might knock the state over.

The RBA nightmare? Raise interest rates and knock the stuffing out of Victoria, which could snowball to the other states. Or let inflation go higher with the hope Victoria comes back online early enough to allow an increase later on, but if that fails Australia's economy is slammed by too high inflation.

I'm still not sure I understand what the articles author is trying to convey but thanks for your view.

 

[sptrawler]

Good to see young women getting into the FIFO gig, if you have to work, you might as well get the best money you can.
But as she says,it isn't for everyone.

Kiwi FIFO worker on reality of 'glamourised' Aussie mining industry

Siobhan makes nearly twice the average Aussie salary – but it's not all it's cracked up to be.

au.news.yahoo.com

 

[divs4ever]

Whats to understand?
Victorians are at risk of moving out of state and annoy the rest of the nation.
RBA understand the dire implications.

Victorians have been doing that for decades

the RBA finally understanding that could be a problem , well that is new

 

[Smurf1976]

Vicotria is in worse shape than the other states.

As someone who remembers the early 1990's economic situation all too well, this sounds eerily familiar.

The other states weren't going brilliantly but it's Victoria that really crashed and brought the national economy down back then. That plus the big corporate collapses which occurred at the time.

 

[qldfrog]

Is this for real?

https://www.heraldsun.com.au/news/victoria/labourers-on-36hour-week-to-earn-120000-under-proposed-cfmeu-pay-deal/news-story/a00fa173146d913f92c9ae3b6301d0dc

 

[divs4ever]

Is this for real?

https://www.heraldsun.com.au/news/victoria/labourers-on-36hour-week-to-earn-120000-under-proposed-cfmeu-pay-deal/news-story/a00fa173146d913f92c9ae3b6301d0dc

more complicated than it seems

a traffic controller can lose points off driver's licence for a motorist error that ignores the controller's directions ( try being a traffic controller without a drivers license )

a former controller i knew went through the legal gobbledy gook and changed to 'event security ' including doing bomb detection courses ( and get better paid for less overall risk ( assuming you didn't trigger an explosive device )

 

[TimeISmoney]

more complicated than it seems

a traffic controller can lose points off driver's licence for a motorist error that ignores the controller's directions ( try being a traffic controller without a drivers license )

a former controller i knew went through the legal gobbledy gook and changed to 'event security ' including doing bomb detection courses ( and get better paid for less overall risk ( assuming you didn't trigger an explosive device )

Try standing in the same spot all day on hot bitumen in summer, and a lot of them get run over by cars.

 

[qldfrog]

Try standing in the same spot all day on hot bitumen in summer, and a lot of them get run over by cars.

Work on my cul de sac Rd, 2 persons with walkie talkie, 1 each side of work area , 3 operators doing the work, so far 2 full days sitting in car with AC, 5 houses on the stretch , we crossed once , neighbours were in holiday I think 2 days works. 2 people highly paid for managing traffic of 5 cars during that time..sure it is hard to be competitive as gainst Indonesia or China or anywhere indeed....

 

[qldfrog]

Try standing in the same spot all day on hot bitumen in summer, and a lot of them get run over by cars.

How many get run over , cause this is more than I got going into mines.
This is a joke .this country is out of wack with real world and we are all going to be hurt badly

 

[Smurf1976]

traffic controller

Never my real job but I've been there, done that. Yes I had the relevant ticket.

The task itself is straightforward and not hard so long as the wind doesn't get up. The big problem is the public - there's quite a few people who really do need a reality check.

It's not using a radio and turning a sign that's hard. It's constantly being on the look out for idiots that's the problem with it. That plus if you'd like to cop some abuse for doing nothing wrong, that's one way to get it.

 

[qldfrog]

Never my real job but I've been there, done that. Yes I had the relevant ticket.

The task itself is straightforward and not hard so long as the wind doesn't get up. The big problem is the public - there's quite a few people who really do need a reality check.

It's not using a radio and turning a sign that's hard. It's constantly being on the look out for idiots that's the problem with it. That plus if you'd like to cop some abuse for doing nothing wrong, that's one way to get it.

No doubt but I am an antique and still think in 2024 :100k+ a year needs to be deserved for a bit more than standing up on a side of the road and coping abuse, and please no more crying about real estate prices....

 

[wayneL]

. That plus if you'd like to cop some abuse for doing nothing wrong, that's one way to get it.

You don't have to be a lollipop person for that, just having the temerity to drive the speed limit will do it

 

[TimeISmoney]

How many get run over , cause this is more than I got going into mines.
This is a joke .this country is out of wack with real world and we are all going to be hurt badly

I haven't even looked far, people drive like morons.

Serious pedestrian incident, Palm Beach - Queensland Police News

Police are investigating following a serious injury crash at the intersection of Gold Coast Highway and Twenty First Avenue, Palm Beach today. Initial

mypolice.qld.gov.au

Father identified as traffic worker who died in 'avoidable' crash in Melbourne

www.9news.com.au

 

[TimeISmoney]

Work on my cul de sac Rd, 2 persons with walkie talkie, 1 each side of work area , 3 operators doing the work, so far 2 full days sitting in car with AC, 5 houses on the stretch , we crossed once , neighbours were in holiday I think 2 days works. 2 people highly paid for managing traffic of 5 cars during that time..sure it is hard to be competitive as gainst Indonesia or China or anywhere indeed....

Most of them work on roadside construction, I've heard it all before mate aye. I worked on construction in MT Isa and had to dog cranes all day in full sunlight in construction attire. A lot of people who think they can do it usually collapse in the first 3 days of sunstroke.