Worried by the latest report on the state of the Australian economy to emerge from Access Economics? Don't fret just yet. Access Economics and Chris Richardson are no strangers to forecasting. But most of them just happen to be wrong.
You may think that Access Economics is one of the more respected economic modelling and forecasting organisations. But their predictions seldom come true.
The head of Access Economics, Chris Richardson is on TV almost every night, giving his sound bite on the state of the economy. I'm almost tempted to give him the "Tim Costello Award" for gratuitous and pointless commentary. Because the claims by Access are usually so outrageous that the media feel it their duty to report it. However, its really just downright scaremongering.
The latest report from Access has predicted some very dire straits indeed for Australia. They have suggested that the RBA will probably cut interest rates by full percentage point this year. Access also say that unemployment is likely to rise to 8.5% or well over 1 million people. I wouldn't at all be surprised if Richardson pops up on TV soon calling the end of the world as we know it. And he would do it with such a straight face too.
But lets take a step back,to just 12 months ago in April 2008. What were Access predicting then? Chris Richardson, apparently the fount of knowledge on all things economic had the following to say:
CHRIS RICHARDSON: I think for 2008, Australia will be absolutely fine. Our share markets might dance to the tune of the US, but our economy is very much plugged into China these days. And China's still fine.
And people, I think, lots of the negatives have been very newsworthy, the US recession, the meltdown in markets, the higher interest rates, people have not recognised the strengths of the positives also out these at the moment.
In particular, we're seeing, for example, a tripling in coking coal prices. This is essentially, coal is Australia's largest export. This is essentially a massive positive.
PETER RYAN: Your message is that if China is okay, so is Australia?
CHRIS RICHARDSON: Yes, and in 2008, China is absolutely fine. People are too worried about slowdown and the problems of slow-down, higher unemployment and the rest of it in Australia in 2008.
We don't think that what would characterise Australia this year, rather we think it won't be the problems of slowdown, it'll be the problems of prosperity including inflation and interest rates, which will continue to be the standout features of Australia's economy in 2008.
Ahh, thanks for that Chris. (And for the record, just months before that, Access Economics were predicting a Golden Age for Australia!)
So in April 2008, Inflation and Interest rates were the big problem for Australia going forward? But just 12 months later, they don't rate a mention from Access.
People were too worried about higher unemployment? Oh dear, you didn't see that one coming did you? But 8.5%? Give us all a break, it wont even go close to that.
And apparently China was going to be our saviour. Funny thing is, whilst its come off its highs, China is still growing strongly.
So what if anything did Access Economics get right? They got to spruik their business to all and sundry through the media. Because the only thing that Access are good at is being masters of spin and a big story. You see, Access actually charge people for economic modelling. Yes, people pay for their work. Even in business, there is another one born every minute.
We have seen how well they have fared in the past year. Lets come back in 12 months time to see how accurate Access Economics and Chris Richardson are on their predictions.
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