Harvey Norman has reported an 8.7 per cent jump is sales for December, 2008 over 2007 while JB Hi Fi have said that they are confident of achieving growth of over 27% for the 2008/2009 financial year.
Harvey Norman’s chairman Gerry Harvey has attributed a rise in sales in December to the package. But he says it looks like the boost may have been temporary.
“Now that I’ve looked at my first couple of weeks or three weeks nearly sales in January, they’re not good,” he said.
“My view is if there’d been no fiscal stimulus I don’t think it’d have been much different.”
He says the Government may have been better off keeping the stimulus money.
“In retrospect now you say to yourself: ‘was that a real good idea, that was 10.4 billion, that’s a lot of money’,” he said.
“Did it have just a temporary effect for December and then disappear? Gee – let’s maybe learn a lesson from that and not do that again, I don’t know.”
The news comes as Access Economics a leading economic forecaster claims that we are in for the sharpest deceleration Australia’s economy has ever experienced. They also claim that Australia is in a better position than almost any other rich nation heading into the recession “We had to have”.
“Very big and bad news is headed our way,” Access said in its Business Outlook for December 2008, released yesterday. They are also forecasting that unemployment will climb to over 7%.
Also forecasted are the following predictions.
– Global growth in 2009 will be worse than at any time since the early 1990s, and may well be the worst in several decades;
– Australia’s recent prosperity will unwind “scarily” fast on the back of a slowdown in China;
– A big fall in the rate of Australia’s inflation, as petrol prices tumble and retailers and wholesalers cut margins;
– Official interest rates will be cut to 2.5 per cent;
– The $A to tumble to US56 cents in 2009;
– Unemployment to jump from its present rate of 4.5 per cent to more than seven per cent by early 2010;
However ABC Economics Editor Alan Kohler disagrees with Access Economics’ latest business outlook. In a comment piece for Business Spectator Kohler wrote after the Access Economics report came out “Today is mostly an exhibit of how little notice we should take of forecasts, even those from good economists.
Throughout most of last year Access’s very good economist Chris Richardson and I conducted a friendly debate about growth and inflation – Chris was saying, both privately and publicly, that the authorities should focus on inflation and that growth would be okay; I was saying and writing that we were in a for a serious recession and that inflation would not be a problem and that rates should be cut and fiscal stimulus should be used.
He added “Access is forecasting economic growth of 0.8 per cent for 2008/09, including a recession during 2009 (but not necessarily two successive quarters of negative growth). It then expects 2.4 per cent growth in 2009/10 and 2.7 per cent in 2010/11. This is pure guesswork. Forecasting a recession for 2009 is not a guess because the recession has already begun; after this year absolutely anything is possible”
He then took a swipe at the Federal Government when he wrote “The Government’s position is even sillier. Treasury is currently sitting on a MYEFO forecast for nominal GDP in 2008/09 of 7.75 per cent. That’s right – your eyes don’t deceive you: 7.75 per cent! The forecast for 2009/10 is 3 per cent; for 2010/11 it’s 4.25 per cent and 2011/12 it’s (pick a number) 4.25 per cent. The fine print explains that the figures for 2008/09 and 2009/10 are “forecasts” while those for the other two years are “projections. Whatever they’re all wrong” he said.
Meanwhile in the US, 4 liquidators have moved into to wind up the second largest consumer electronics retailer Circuit City. A Federal Court Judge has given them till March 31 to try and sell $1.7 Billion dollars worth of stock in liquidation sales which several analysts say will hurt the #1 CE retailer Best Buys.