Economy picks up; Future Fund boss under fire; shoppers beat Xmas rush

Economy picks up; Future Fund boss under fire; shoppers beat Xmas rush

News in brief

The executive assistant to the boss of the Future Fund racked up $20,000 in bills on two business class trips, one of which was to inspect hotel rooms in the US for the sovereign wealth fund's senior management team.

 

Twenty-twenty-five has proven a year of contradictions in the housing market, according to Domain, with the first-interest rate cuts in four years being swamped by rising property prices in every capital city.

 

The Australian Defence Force has confirmed that the Chinese flotilla in the Philippines Sea is composed of four ships, and it could be heading toward Australia.

 

Consumers are buying earlier ahead of Christmas this year, but the total number of shoppers will fall as cost-of-living pressures persist, according to the Australian Retailers Association.

 

The search for missing Malaysia Airlines Flight MH370 will resume on December 30, more than a decade after the Beijing-bound flight disappeared in one of the world’s greatest aviation mysteries.

Fear-o-meter

The economic growth figure for December – 0.4 per cent – at first blush looks like the economy is moderating and recent price pressures might not be long-lasting. But the devil is in the detail.

 

A run down in inventories subtracted 0.5 percentage points from GDP, after a flat contribution in the June quarter. In short, a lift in demand has outpaced firms’ ability to supply goods and services.

 

Take inventories out of the equation (a run-down suggests good news for the economy even if the accounting treatment says its bad news) and the GDP figures show broad-based strength in the economy. Households, business and government all contributed to growth.

 

The focus now is on capacity constraints. Can the economy ramp up production of goods and services to meet the increased demand, and refill the stock of inventories, without triggering price pressures?

 

That’s the $64 question. If the economy can’t, then rates will start rising next year.

Fear & Greed Q+A today

The global payments giant on how agentic AI will change the way we shop in the next couple of years, and the importance of the Black Friday, Cyber Monday sales for Australian retailers:

 

“It’s probably only really picked up in the last five-plus years… and it’s huge. The transaction volumes we’re seeing and the amount Australian retailers are driving is phenomenal. In the US, it’s concentrated into those two days, but here, because we don’t have the Thanksgiving holiday, it’s become almost a month-long sales season. Some retailers in this part of the world do 20 to 30% of their annual transaction volume just in Black Friday, Cyber Monday.

 

We’ve seen the Australian dollar be the fourth-biggest currency globally on the Stripe network during this season — only behind the US dollar, the pound and the euro. It’s a proxy for how much consumers in this market are leaning in. Sydney is the ninth-biggest city in the world in participation in Black Friday, Cyber Monday sales on the network.”

The economy expanded at a 2.1 per cent clip during the September quarter, with consumers, business and government spending driving growth. The bad news is that inflation pressures are rising, taking an interest rate cut off the agenda. Growth for the quarter was 0.4 per cent, fuelled by higher spending by businesses, particularly data centres. The trade sector was solid – imports were helped by the appreciation of the Aussie dollar and, so far, the Trump tariffs haven’t hit the local economy. Notably, inventories detracted 0.5 percentage points from growth. On a per capita basis, growth was flat, suggesting economic growth is only rising because of population growth. Productivity picked up but at 0.8 per cent, it is still weak.

Greed-o-meter

City	House increase $	Unit increase $
Sydney	150,000	39,000
Melbourne	70,000	29,000
Brisbane	98,000	90,000
Adelaide	92,000	90,000
Perth	82,000	61,000
Canberra	48,000	-9,000
Combined capitals	99,000	47,000

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Three interest rate cuts this year have given a dual-income household an additional $73,800 in borrowing power, according to new analysis from Domain. But in most capital cities the median house price has grown by more than that figure between January and September.

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Source: Domain