Budget Blues No More
Look, there is some good news with the advanced report of todays from today’s Mid-Year Economic and Fiscal Outlook – the budget update. It forecasts Australia next year will pay down almost $600 billion in gross debt.
Now there is a variety of reasons, like the 371,000 jobs created. More jobs created mean more tax. At the same time, there are a fewer people unemployed which equals less money being paid out.
Iron Ore and Coal Prices, they are keys to our export wealth and economic health. In May, government said Iron ore would fall to $55 US a tonne. Today, its sitting above $69 a tonne, which is worth close to $3 billion to the budget bottom line.
It all adds up to $23 billion being paid off the national debt next year, cementing our Triple AAA credit rating which Standard and Poor’s previously said had a one in three chance of being cut.
Now, this is all great news. But with this there is a conundrum. Because while the economy is improving rapidly, many households – maybe yours – will be feeling worse off, at least for the next 12 to 18 months.
Wages not growing and interest rates are likely to rise if and as the economy picks up.
In Sydney and Melbourne, house prices – you can feel it – are cooling quickly. The wealth effect of higher house prices is dissipating.
You can see that in the shops already, with sales in full swing a week before Christmas. For many, households and retailers life is tougher.
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