A warning for 2010

The decision of the US Senate to reappoint Ben Bernanke with the support of even a couple of Republicans represents a good sign for export oriented smart companies that have maintained their inventory and their quality sales teams.

On the other hand, it also represents a warning to those businesses that have unrealistic growth plans for 2010 as there has been a shift in world wide consumer expectations for the coming year towards basics and value added offers.

The fact that Ben is back at a time when the Fed is having its wings clipped suggests that the focus is on the future prospects for increased growth in the dominant world market economy rather than a continuation of the blame game looking back to the fight between bailing out the bankers and propping up the small town businesses.

Both in the US and here in Australia, central banks are likely to see a steady growth curve as the preferred path rather than the volatility that the casino traders would prefer to see prop up their bonuses.

There are a number of straws in the wind that suggest that the various short-term, cash-splash types of government packages are going to be withdrawn in favour of major infrastructure investments and longer term environmental projects.

Another sign that recovery is being taken seriously is the international rise in the tendency of unions to go back to their traditional threat of holiday season industrial action and demand for a greater share of the declining profitability of their employers.

In the short term there will be a shift towards quality products and quality holiday experiences, but longer term households are shifting to sound investments that deliver assured benefits.

According to Morgan Research, Australians are still keen to complete their Christmas shopping with 54% (unchanged) of Australians saying now is a ‘good time to buy’ major household items.”

Gary Morgan says 47% (down 4%) of Australians expect we’ll have ‘good times’ during the next five years, along with falls in confidence about family’s financial situations with 40% (down 3%) expecting their family to be ‘better off financially’ this time next year and just 28% (down 3%) saying they’re family is ‘better off financially’ than a year ago are the drivers in this week’s decline”.

The weekly Roy Morgan Consumer Confidence Rating has fallen 4.4 points to 122.4 points – it’s biggest weekly fall since a fall of 9.1 points in the week to January 24-25, 2009

On the employment front, we must all wait for the Henry Tax review to see if the Government is going to follow the lead of Tony Abbott in giving special attention to the role of small business and independent contractors who are the main source of new job creation, rather than conversion of part-time jobs to full time employment.

The real question, however, following research by the US SBA Office of Advocacy, is the extent that Henry will look at payroll tax as a barrier to non-employers and sole proprietors shifting their long term horizons to becoming a source of new jobs at the rate that is required by our immigration policies and shift from a quarry and farm economy into a smart company economy.

As Australia heads into the election cycle, the key is to shift attention away from government spending patterns and onto sound strategic planning for a steady growth in the next financial year.