Australia’s Goldilocks economy

WHAT an incredible run we’ve had.  Despite significant uncertainty in the global economy, the end of the mining construction boom, a slowdown in China and stubbornly high dollar, Australia has now completed its 24th year of uninterrupted economic growth.

And we’re not limping along either, with the Aussie economy likely to see an annual growth rate over 3 per cent for 2014. That’s about our long term average. Not too hot and not too cold — a “Goldilocks” economy.

The problem is that because we seem to be bombarded with new economic figures every day it’s hard to step back and get a realistic big picture of what is actually happening.

Here’s our take on the economic state of play and how it could affect your financial decision making.

THE BIG PICTURE

It’s a mixed bag for the world’s major economies at the moment.

China is taking a breather from the breakneck, double-digit growth they’ve averaged in the last few years, but remains on track to meet a more reasonable growth target of around 7.5 per cent.

However, there’s rising concern that their domestic housing market is in trouble, which would stifle their economy and demand for Australia’s commodity exports such as iron ore.

Meanwhile, the US continues its stimulus-driven recovery, although weaker-than-expected jobs data for August and the end of its economic stimulus program next month may serve to dampen market confidence.

Europe is heading in the other direction entirely, with the European Central Bank dramatically ramping up their stimulus efforts, dropping interest rates and moving deposit rates into negative territory.

INTEREST RATES

Locally, the Reserve Bank has held official interest rates steady for 13 months at a historical low level of 2.5 per cent to encourage growth in the economy.

But they’ve found themselves between a rock and a hard place lately, namely the hot property market and a stubbornly high Aussie dollar.

Low interest rates have driven up property prices, with worrying double digit rises in Sydney and Melbourne property over the last 12 months.

A persistently strong currency, on the other hand, constrains exports and hinders our ability to move away from mining driven growth.

However, the RBA appears unlikely to take any direct action against the dollar, and instead seems happy to ‘jawbone’ or talk down the currency in an effort to push it lower.

The majority of economists still expect the next interest rate move to be an increase in early 2015.

JOBS

There was a bit of a scare in July when the unemployment rate unexpectedly jumped from 6.0 per cent to 6.4 per cent.

However, as with GDP, the unemployment rate is backwards looking.

A more forward-looking indicator of employment is job advertisements, which reflects what employers are doing right now.

Fortunately, job ads paint a healthier picture, up 1.5 per cent in August and 7.7 per cent higher than a year ago, suggesting that businesses are confident and looking to grow.

CORPORATE AUSTRALIA

Profit-reporting season has wrapped up and corporate Australia appears to be in reasonable shape.

Total revenue for reporting companies was up 4.1 per cent to $585 billion, while net profits rose by 31.4 per cent to $52 billion.

Investors can look forward to getting a piece of those profits very soon, too, with $20 billion in dividends due to be paid out over the next two months.

And despite an unpopular budget and uncertainty in the global outlook, business and consumer confidence are relatively positive, which bodes well for further growth.

If companies make bigger profits, bosses are happier and more likely to hire more staff and invest. That’s great for the economy.

OUTLOOK

Overall, Australia appears to be on track for another year of positive economic growth.

There’s still a lot of uncertainty, particularly in the global economy, but our domestic economy remains strong and the RBA appears comfortable managing the risks posed by the hot property market and strong dollar.

So as we ease off our reliance on resources, there’s no reason we can’t adapt and continue to grow into the future.

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Terror alert: Australian troops could be the targets of terrorist attacks by Muslim extremists on our soil

FEARS Muslim extremists could target serving Australian Defence Force members in a terrorist ­attack has sparked an official warning to the troops after a ­uniformed officer was abused in Sydney’s CBD.

Just 48 hours before Australia increased the public terrorism alert to High, the Defence Security Authority underlined the risks of a Lee Rigby-style attack in an email obtained by The Sunday Telegraph.

British soldier Lee Rigby was run down by a car, murdered and almost decapitated by Muslim ­extremists on a London street in broad daylight last year.

Marked Security Intelligence Report, the memo details verbal threats made against a uniformed officer. It says the ADF member was approached by a group of young men and told to “go to the Middle East so we can blow your f ... in head off you c. t”.

The incident was reportedly witnessed by a large group of ­people but the ADF member walked away from the scene.

Australian intelligence agencies have privately cited the Rigby case as one of their biggest fears because the brutal attack underlined that once intent was established the tools of a terrorist attack, in this case a car and knife, could be readily obtained.

The document does not detail when the verbal attack occurred but was sent to army officers across Australia just 48 hours ­before the Prime Minister ­increased the nation’s official ­terrorism alert level to High.

“The Defence Security Authority assesses that this incident of anti-Defence sentiment is related to Defence’s current and possible future operations in the Middle East,” the memo states.

“A further escalation of anti-Defence sentiment in Australia cannot be discounted.

“During the initial deployment of Australian troops to Iraq and Afghanistan, the DSA received an increase in reported threats of verbal abuse. This verbal abuse was from individuals who rejected Australian troops’ deployment to the Middle East.

The DSA, which advises the Chief of the Defence Force on how to manage security risks in Australia, warns in the memo of the need to be vigilant and report any verbal threats in an official ­incident report.

Australia’s intelligence agencies have also cited the Rigby case to illustrate the risks of opportunistic, lone wolf attacks by homegrown terrorists.

The warning underlines the three major risks intelligence chiefs have outlined: an opportunistic lone-wolf attack such as the Rigby case, the storming of a major shopping centre or building or a mass casualty event.

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Hate for sale as Muslim flag adopted by jihadists goes to auction at Sydney mosque

PREMIER Mike Baird said the Islamic State flag could be banned across NSW.  His stance follows footage of one of the flags, which is linked to the barbaric terrorist organisation, being auctioned in front of families and young children in Sydney.

“That is something we will consider and work with community groups about but we can’t have the position where you are seeing any activity that is promoting terrorism, supporting terrorism,” Mr Baird said today.  “There is no way in this state that we are going to support that.

“It is a flag that is used by ISIS, and ultimately that is something we have to respond to and we have to have a zero-tolerance approach,” he said.

The flag, used by the terrorists responsible for thousands of murders across Iraq and Syria, including the execution of two Western journalists, was auctioned at a Liverpool mosque.

Disturbing footage of the sale is being shared among Australian teenagers, some of whom appear to have been radicalised by the extreme violence associated with the outlawed Islamic State, and its black and white flag featuring the Shahada.

One 15-year-old Muslim boy who posted footage of the auction to his Instagram account has since posted pictures with the black flag of jihad.

In a chilling reflection of the IS campaign in Syria, another image of himself in a headscarf has a caption directed at Syria’s president: “going to kill Bashar al Assad now”.

While a Muslim community leader claimed the Shahada symbol had largely been hijacked by IS militants, political leaders slammed the flag auction at Liverpool’s Markaz Imam Ahmad mosque and youth centre, led by Sheikh Abu Adnan Mohamad. A painting depicting the flag was also sold.

Mr Baird said earlier: “We expect everyone in NSW to obey the law or face the consequences. All parents and all communities need to protect young people from the insidious and corrosive effects of the radical ideologies that are causing so much suffering around the world.”

NSW MLC Fred Nile called the auction “disgraceful” and said the flag used by the Islamic State should be banned in Australia. “They fly the flag as something to be proud of — they should be ashamed of beheading people and selling women into slavery,” he said.

NSW Police investigated and said the auction would only constitute an offence if the proceeds were funnelled to terror groups.  The stated objective of the auction was to raise money for the mosque.

Attorney-General George Brandis has signalled the government’s intention to introduce new laws making it illegal to incite and promote terrorism. IS is designated as a terrorist organisation under Commonwealth law.

While repeated attempts to contact the mosque for comment by phone and email went unanswered, Muslim community leader Keysar Trad last night defended the sale, saying the Islamic State had “hijacked” the black and white standard, which bears the Shahada — an ancient Islamic creed that reads: “There is no God except God and Mohammed is the messenger of God.”

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Terror alert will fuel "islamophobia": Islamic leaders

They should be complaining to their Muslim brethren in the Middle East  -- whose behaviour is the reason for terror fears

Islamic leaders fear Australia's heightened terror threat rating will victimise Muslims and deepen "Islamaphobia".

The Australian Federation of Islamic Councils says the country's Muslim population – about 500,000 nationally – will be unfairly targeted and face increased prejudice due to the high terror alert announced on Friday.

Federation spokesman Keysar Trad said raising Australia's threat level to the point that a terrorist attack on Australian soil is considered likely will be a "dog whistle to hate writers in the media who will write more negative rhetoric directed at the Muslim community".

"This only increases pressure on the Muslim community and makes it even more difficult to feel like an Australian," he said.

Mr Trad said Muslims already faced unfair targeting by law enforcement and security authorities, but "what happens is that increases in times like this".

Australian Islamic Mission secretary Seyed Sheriffdeen said Friday's decision was an overreaction, and raised suspicion that it was a tactic designed to "implant fear in the minds of Australians".

"We are going back to the Howard era here, terrorising the minds of people unnecessarily," he said.

"People going to Syria and Iraq make up a very marginal number of Muslims ... ISIS are actually anti-Muslims and what they are doing is lunacy."

Dr Sheriffdeen urged the Australian government to instead address youth unemployment and work on engaging with young people to prevent them accessing extremist views.

Prime Minister Tony Abbott has denied that raising the national security threat had anything to do with religion.

"This is about ensuring that this marvellous country of ours ... continues to be just that."

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