Big world slump by Trump tariff strategy warns economic head
JUST how recession-proofed is Noosa from a predicted Donald Trump economic bubble burst? - probably better than a lot of other places around the world.
That is according to Bendigo Bank's national head of economics and market research David Robertson who has entertained a room full of business folk at Tewantin.
Ms Robertson's third annual crystal ball gazing session held at Tewantin Noosa Bowls Club, was fairly scathing on the US president's unconventional economic adventurism, but upbeat on Australia's ability to ride out any global shock waves.
And he liked the ongoing prospects of Noosa plus the Sunshine Coast based on recent performances of job creation and forecast increases in regional domestic product.
Mr Roberston said Mr Trump really has his economy running hot, but "not I would argue in a sustainable manner".
The trouble with those sort of hot markets is firstly, they don't last forever and secondly, my experience is with a bull market ... the longer the riser and the run generally the more catastrophic the finish," he said.
"I can't see how the US can avoid over the next couple of years a pretty serious correction, if not a crash, if not a recession. I'm far more optimistic about Australia's going to cope with all of that. It's 26 years since out last recession - it's a remarkable run."
He said the world was currently in a Goldilocks period of economies running not too hot and not too cold, but he did not believe that this would see all "live happily ever after".
Mr Roberston was concerned that there was far too much overseas debt - "even more than we had going into the financial crisis" - and saw Mr Trump's unconventional corporate tax cuts and tariffs as areas for concern.
"I am worried about a Trump bubble," he said.
He said the US bull market started in 2009 and no upswing has last longer then 10 years, but he predicted the end of this in a year to 18 months.
Mr Roberston said Asia had a larger combined economy than the US and was growing stronger, so Australia was well placed to survive any major shocks through its major trading partners. His biggest area of concern was the looming trade wars.
"The last time the US really put up tariffs aggressively was in 1930 and you know the Great Depression would suggest that didn't work terribly well," he said.
Mr Robertson said trade wars are not good and are not easy to win and he said if tariffs across the world were raised 15 points almost every country would suffer.
"The pace that it's going to hit first is America. For example the US put tariffs on steel and aluminium and washing machines at the start of the year, and you how the price of steel has sky-rocketed since.”
He said in Australia the outlook is a lot more benign with lots of jobs growth and a rise in workforce participation. His main concerns were a lack of wages growth, which is "half of where it was 10 years ago", the drought and the record level of household debt.
Mr Roberston believes interest rates will go up come the Melbourne Cup day meeting of the Reserve Bank, but saw the Sunshine Coast well-placed going forward.
He said unemployment levels were below the national average and saw lots of job s regionally in construction, health care and other services.
Noosa should continue to thrive with the predicted low Australian dollar rate and investment in the new airport.