We’ll all  be out shopping again soon – this time with our own money.

The economists at  Access Economics, who have just published new retail forecasts, are confident about that.

Naturally they admit that our spending has been boosted over the past year by stimulus measures, such as tax breaks,  subsidies and low interest rates, which left extra money in many budgets.

However they say those times are now rapidly  passing , to be replaced by new growth, based on a stronger job market.

“Ultimately,” they say,”spending growth is regulated by income growth.”

Th Access economists say, too, that job growth is the “bedrock” of consumer spending.

Access noted that almost 200,000 jobs had been created in the five months to January.

It said, too, that about half of those new jobs had been full time.

“A greater sense of security makes for a more confident consumer,” Access said.

Its work is backed by other economic research.

The National Australia Bank, for example, is reporting that business confidence has returned to the surprisingly strong levels of last November.

That means business confidence is now back at levels not previously seen since May 2002.

And the ANZ bank said the number of job ads, appearing in Australia, had leapt by 19.2 per cent in February.

The ANZ said the nation is now “enjoying solid employment growth and reduced unemployment.”

However it warned that “a record 30.2 per cent” of all Australian jobs are now part time or casual.

The bank’s chief economist, Warren Hogan, said this represents “a significant degree of spare capacity or underemployment.”

Access has reservations, too.

It says, for example, that there are still “plenty of factors which will stop retail sales from being spectacular.”

These would include further interest rate rises, which would slow growth in house prices and ultimately affect consumer confidence.

These rate rises would eat directly into shoppers’ incomes, Access said.

The Australian economy grew by 0.9 per cent in the December quarter and 2.7 per cent in 2009.

This followed a rise of 0.3 per cent in the previous quarter.

But growth of some 4 per cent is needed to absorb each year’s school leavers into the nation’s workforce,

Figures released by the Australian Bureau of Statistics today show that the Federal government’s stimulus package – reflected in a 10.2 per cent surge in government investment – was the main reason for the quarter’s relatively strong rise.

However private investment also rose by 3.5 per cent in the final three months of last year.

Household spending rose by 0.7 per cent.

A fall in Australia’s net exports, though, restricted growth in December quarter.

Import growth, of 7.7 per cent in that time, was far greater than the nation’s export growth of just 1.7 per cent.

Manufacturing surged by 5.1 per cent in the final three months of last year in seasonally adjusted volume terms,  while wholesale trade rose 3.6 per cent .

Final consumption spending rose by 0.9 per cent in the quarter and 3.2 per cent over the year.

Australia’s terms of trade rose by 2.9 per cent in the final three months of last year.

But they were still down 11.2 per cent over the year.

The Bureau also reported that real net disposable income rose by 1.2 per cent in the December quarter.

However it was still 1.2 per cent over over the year.

New South Wales was the nation’s powerhouse last year, chalking up 5.2 per cent growth in State final demand.

That was exceeded only by the ACT, which saw 7.6 per cent growth on the same indicator.

Victoria saw 4 per cent growth, Queensland recorded a contraction of 1.1 per cent, South Australia chalked up 5 per cent growth, Western Australia 3.3 per cent, Tasmania contracted by 0.3 per cent and the Northern Territory experienced a 6.3 per cent contraction.

The lure of the January sales proved as strong as ever last month, with retail sales throughout Australia rising 1.2 per cent during the month,

This followed disappointing pre Christmas trade, with sales falling by 0.9 per cent in December.

The Australian Bureau of Statistics  reported that Australia’s department stores, clothing and shoe shops and grocery chains all increased their sales in January.

However the nation’s cafes, restaurants and take-away food stores saw their trade fall, during the holiday period.

The bureau also reported today that home building approvals fell by 7 per cent during January.

This followed removal of the Federal government’s stimulus subsidy, for first home buyers.

However the Housing Industry Association reported, earlier this week, that home sales, by Australia’s volume builders, rebounded by 9.5 per cent in January.

The association took this as a sign that upgraders and investors are re-entering the nation’s housing market.

The Reserve Bank board, which is meeting today to review Australia’s interest rates, will take all of  these figures into account.

It’s decision is to be announced at 2.30 this afternoon.

Australia’s economic prospects look good, as the country moves towards the Federal election due later this year.

Voters, though, should be wary of big electoral promises, offered by any of the major parties.

They might well be particularly hard to fund, this time.

The extra spending, in the Rudd government’s stimulus package, is now putting considerable pressure on the Federal budget.

The Treasurer, Wayne Swan, conceded yesterday that Australia had been helped by China’s economic strength, after the global economic crisis struck.

However he told  ABC television that the stimulus had been mainly responsible for Australia’s relatively strong performance over the past year.

“I think it’s very important to understand that – first and foremost – our domestic surplus – delivered in a timely way – is the principal reason why the Australian economy is so strong, compared to just about ever other advanced economy,” Mr Swan said.

New evidence now suggests that Australia’s relatively strong performance is likely to continue.

A leading index, produced jointly by the Westpac Bank and the Melbourne Institute, continues to surge.

A senior Westpac economist, Matthew Hassan, said that “continues to point to a dramatic improvement in (Australia’s} growth prospects.”

Mr Hassan said the index also suggests that the Australian economy now has a growth outlook that is on a par with that seen in 2007  “at the height of Australia’s resources boom.”

However if that produces fresh inflationary pressures  the Reserve Bank is sure to respond with further interest rate rises.

So the  election, later this year, will be held in good, though necessarily restrained times.

Certainly not at a propiti0us time for politicians, from any party, to be making  expensive promises, to win votes.

Reject those who do.

An “all out” investment boom is possible in Australia over the next two years, according to Access Economics.

These now privatised former Treasury economists reached this conclusion – with some reservations – just a few weeks after Perth’s proud home town newspaper, The West Australian, published similar projections.

Access said the giant Gorgon LNG project – and government infrastructure projects – could boost Australia’s investment spending this year by more than $69 billion. However the private forecaster warned that even a strong investment recovery would still be a “patchwork” affair.

The usually cautious economists at Access predicted boldly that any boom would be dominated by mining projects in Western Australia.

In the latest edition of their regular publication Investment Monitor, they say “Western Australia remains the centre of the action for growth in investment at present.”

Access says this State has more than twice the value of definite investment projects under way than its nearest rival, Queensland.

“…and it continues to extend that margin,” Access added.

Its economists say that there are currently 145 projects, worth some $161 billion, awaiting final approval this year.

“Indeed, all of these projects are proposed to commence in 2010,” Access added.

Most are mining projects.

“The decisions on those project will mark the difference between investment stabilising at a high level and a further move up to an all out investment boom over the next couple of years,” the forecaster said.

But it added a caution.

“That said, it would be a patchwork boom rather than an even handed one.

“The high $A and relatively weak global demand is still wreaking havoc in some sectors.”

Access said these include manufacturing, outside the resource sector, international tourism and the construction of new office blocks.

A trade slump over recent months will slash Australia’s economic growth.

It was due to the global economic crisis.

The slump is expected to slash 1.8 per cent  – by volume  – from the nation’s  economic growth for the  September quarter.

These developments were reported in September quarter balance of payments figures, which the Bureau of Statistics has just released.

Its figures show that the nation chalked up a current account deficit of $16.2  billion, on seasonally adjusted figures in the quarter.

That compares with a deficit of $13.1 billion in the June quarter.

Export prices fell by 19.5 per cent, in the 12 months to the end of September, the biggest annual fall seen, since records were first kept in their present form, back in 1959.

The Federal Treasurer, Wayne Swan, said this reflects “the dramatic impacts of the global recession.”

Export volumes, fell by 2.3 per cent in the September quarter and 0.2 per cent over the year.

Import volumes rose by 5.8 per cent in the September quarter,  but were still 8.2 per cent lower over the year.

Fortunately, import prices fell even more sharply than export prices.

The bureau also reported that Australia’s net foreign debt rose to $637.5 billion in the September quarter.

That compares with $634.2 billion in the June quarter.

In seasonally adjusted terms, Australia had a deficit of  $5.4 billion on its goods and services account in the September quarter.

This compares with a deficit of almost $1.2 billion in the June quarter.

Christmas sales will be “reasonable” this year, but well short of boom conditions, according to Access Economics.

The forecaster says that, in effect, Australia’s shopkeepers had their Christmas early this year.

The economists said that happened back in March, when the Federal government posted out thousands of $900 cheques, as part of its first stimulus package.

“and retail sales spiked up as a result,” the economists said.

That, of course, was precisely what the government wanted, at the time.

But more recent spending has been far more modest, Access said.

The economists pointed out that, even in nominal terms, retail sales rose by just 0.6 per cent in the three months to the end of October.

However consumer confidence remains very strong, Access said.

It said two key indicators of wealth, the share market and house prices, had also rebounded strongly, after the global economic crisis.

These developments would usually be accompanied by strong borrowing, as Australians became willing to spend more.

“Yet we are seeing some consumer caution on this front,” the forecaster said.

“The stock of personal debt remains 9.5 per cent lower than a year ago.

“Consumers have used their interest rate windfalls to pay off some debt,” Access said.

The forecaster is predicting that real sales, in Australia’s shops, will rise by just 2.1 per cent in the 2009-2010 financial year.

Australians are eating well – but are not quite as well dressed – or shod – as the nation emerges from the global economic crisis.

The Statistician reported that Australia’s  retail sales rose by 0.3 per cent in October, with tills ringing loudly in food stores, department stores, cafes, restaurants and take-away food outlets during the month.

This seasonally adjusted result follows a 0.2 per cent contraction in September.

However, clothing, footwear and personal accessory stores all saw their sales fall in October.

But retailers in the Northern Territory, New South Wales, Victoria, Western Australia and Tasmania did relatively well during the month.

However sales in South Australia were flat, while those in Queensland went backwards.

There has been a blip, though, in Australia’s consumer confidence.

The Roy Morgan organisation is reporting that consumer confidence has fallen by 2.4 points, over the past week, to its lowest level since mid September.

However it is still 25.4 points above the level seen at this time last year.

In terms of personal finances, though,   41 per cent of Australians now expect their family to be ‘better off financially’ this time next year.

Only to 15 per cent expect to be to be ‘worse off financially.’

Australia’s big four banks did relatively well, in the global economic crisis, but they still have some ground to make up with their small business customers.

A new survey shows Australia’s small business owners have a distinct preference for the nation’s smaller banks.

The survey, conducted by the widely respected Roy Morgan organisation, revealed that the big four banks could only register a combined 64.8 per cent satisfaction rating among their small business clients.

The public, at large, was happier, giving the big banks a 73.2 per cent approval rating.

Of course, the past 12 months, dominated by the global economic crisis, has been a particularly trying time for the nation’s banks, both big and small.

The Saint George bank, though, managed to chalk up a 72.3 per cent approval rating among its small business customers.

Norman Morris, the industry communications director at Roy Morgan, said Australia’s banks, generally, have failed to keep up with the more complex demands of their small business customers.

That matters.  Mr Morris said the average small business client is worth roughly twice as much to his or her bank than other clients, because they take more bank products, including loans.

But your correspondent, a former banker, well remembers the agony bank managers go through, wondering whether their small business customers will survive, or go under.

The costs of tackling – and not tackling – climate change became clearer over the weekend, as prospects for a firm outcome, at next month’s Copenhagen conference receded.

A new report estimated that some 250,000 coastal properties, around Australia, could be at risk of flooding as sea levels rise, as a result of global warming.

It said Sydney airport is among the properties at risk.

Developments, on that scale, imply social disruption.

But property damage would just the start of all that.

Earlier studies have shown that many low lying Pacific islands could also be flooded, as Antarctic sea ice melts.

That could well involve the relocation of entire Pacific populations, involving people movements on a scale Australia has not yet seen.

Speaking at an APEC Leaders’ meeting in Singapore yesterday, the Prime Minister, Kevin Rudd, admitted officials, who  have been trying to get a firm outcome, from next month’s climate change talks in Copenhagen, had found themselves “running into all sorts of difficulties.”

“…and therefore it is time for leaders, politically, to step in,” he added.

The reality, though. is that there is now, effectively, no chance of reaching a binding agreement, on steps to tackle climate change, at the Copenhagen meeting.

That became clear when Asian leaders, at the APEC meeting, stepped back from their previous position, which had included a 50 per cent emissions reduction target.

Sources said this had happened at China’s insistence.

Mr Rudd insisted, though, that he will still be looking for “a robust outcome” from the Copenhagen meeting

The retreat by Asian nations, though, is certain to encourage climate change sceptics, when the government’s emissions trading scheme come before Federal parliament again  this week.

The Coalition appeared to be on the verge of a major breakthrough yesterday, in the private talks it has been holding with the government on its proposed legislation.

Reliable reports said the government is prepared to exempt Australia’s farmers, altogether, from its legislation, if the Coalition will pass it through the Senate.

The Reserve Bank now sees “an extended period of prosperity” ahead for Australia.

Its Deputy Governor, Ric Battellino, made that bold declaration, late last week.

But the Treasurer, Wayne Swan, responded by pointing to an IMF assessment, which warned that the global recovery is likely to be “sluggish.”

“A key risk is that policy support is withdrawn before the recovery can achieve self-sustaining momentum,” the IMF added.

The bank has certainly been sounding more upbeat about Australia’s prospects,over the past few days, than the government.

That is quite remarkable.

Optimistic bankers?

What’s next?

The reality, sadly, is less exciting.  Different people see different things, when they look in different directions, even when they are looking at the same economy.

The Reserve Bank has raised interest rates twice, in just two months, because it sees a resumption of strong trade, particularly with China and India, combining with strong population growth, over the months ahead.

It fears that these powerful forces will boost Australia’s inflation, particularly in the housing market.

The government, though, is focused squarely on the still tricky situation, left by the now receding global economic crisis.

It is  gradually  withdrawing its stimulus measures, but as that withdrawal was built in, from the start, those moves are less conspicuous than the Reserve Bank’s action in raising rates.

Mr Swan says:”The truth is that fiscal and monetary policy are working together.”

He says the stimulus provided by the government’s packages – and Australia’s still – relatively – low interest rates are both being – gradually – withdrawn.

“But both are expansionary,” he adds.

However, Mr Swan is still cautious.

“We are not immune from what is going on in the global economy, this year or next year,” he said.

And Mr Swan declared, yet again, that the government would not risk “pulling the rug” from under Australia’s economic recovery, by removing its stimulus measures prematurely.

You can expect your family’s finances to remain under pressure for some time yet.

That’s the central message to emerge – for millions of Australians – from Wayne Swan’s mid year review of his budget.

Although Mr Swan now says Australia’s unemployment rate will peak – during the global economic crisis – at 6.75 per cent – instead of the 8.5 per cent he tipped in May – he also admits that another 105,00 people will find themselves out of work, before the crisis passes.

That’s because the nation’s economic growth will still be low in the years ahead, even though it, too, is likely to be stronger than originally expected.

Mr Swan said the Australian economy is now expected to grow by 1.5 per cent this financial year and 2.75 per cent in the following 12 months.

By current world standards, those would be exceptionally good results.

But growth of at least 4 per cent is still needed each year, to absorb each new crop of school leavers into the nation’s workforce.

West Australians, employed on front line work in the State’s mining industry, are now starting to work overtime again.

But many other Australians are still working short hours each week.

That, too, puts a big strain on family budgets.

Australians are facing many other pressures on their incomes, too.

Reverses in terms of trade will leave a $55 billion hole in Australia’s export earnings, this financial year.

That, in turn, is expected to produce a record fall in company profits, this financial year.

So company dividend cheques are likely to be slim.

And – as if all of this was not bad enough – the Reserve Bank is now clearly in a rising cycle, in its interest rate settings.

The bank has made no secret of its concern over rising house prices.

It won’t be comforted, either, by new figures the Bureau of Statistics has produced showing that the weighted average of established  in Australia’s capital cities rose by 4.2 per cent in the September quarter and 6.2 per cent over the year.

Economists are divided in their predictions of the Reserve Bank’s likely decision, at its board meeting today.

Some expect a rate rise of 25 basis points.  Others are predicting a 50 basis point rise.

Of course, the bank could also leave rates untouched this month.  But that would be a surprise.

Although Australia has performed well in the global economic crisis, thousands of families throughout the nation are still having a very tough time.

The number of full time jobs available has shrunk, but that has been partly offset by strong growth in part time employment.

The Treasurer, Wayne Swan, says this shows Australians have “pulled together” to save as many jobs as possible.

The nation will  be watching closely this week, to see whether the Reserve Bank raises interest rates and whether Australia’s unemployment rate rose last month.

The Reserve Bank will make its decision known at 2.30 pm tomorrow.  As the bank’s Governor, Glenn Stevens, said only last week that there is still not much growth in the Australian economy, a rate rise this month is probably still unlikely.

The unemployment figures, which are due out on Thursday, though, may well show some deterioration.

As Mr Swan also noted, prices for Australia’s exports have fallen by 34.7 per cent, over the past year.

That will certainly have an impact on the nation’s job market, even if that shows up merely as even more substitution of part time work for full time jobs.

Families already struggling to get by on short time incomes, though, have largely been overlooked in the media.

Fortunately, freelance journalists, like your correspondent, do have some  experience, in the survival stakes.

Three items, in particular, can have a big impact on your family budget.

One. Leave your car, or cars, in the garage as much as possible.  The $70 or so, that it costs to fill a family sized car each week, can still buy a useful amount of groceries.  Use public transport, on season tickets, as much as possible.  It’s a lot cheaper.

Two. Eat and entertain at home.  Even a modest meal out is likely to cost upwards of $20 a head.  Round steak, for a hearty beef stew, though, can be purchased for a home cooked meal, for less than $2.50 each, plus a similar amount for vegetable and other ingredients..  And who doesn’t like a good cassoulet?

Three. Private Briefing also has an excellent recipe  for home made bread available, free.  Just ask.

Weak income growth is threatening Australia’s recovery.

You have Ken Henry’s word for that.

The Treasury Secretary made himself absolutely clear on that point, in a speech he gave to business leaders in Brisbane yesterday.

“A key risk to the timing and speed of a recovery in private demand is the near term weakness in income growth,” Mr Henry said.

He warned that this is often overlooked.

It is, he said, “something that is not often given the same degree of attention as real economy developments.”

Mr Henry, though, was not suggesting that the business people present go back to their factories and offices and give their employees  big pay rises.

The problem, as he sees it, is more basic.

“Income growth is expected to be very weak in 2009-10,” Mr Henry said.

He said corporate profits would decline and family income growth would be subdued.

Why?

“This largely reflects significant price falls for Australia’s non-rural commodity exports,” Mr Henry said.

That, in turn, had driven a decline of more than 15 per cent in Australia’s terms of trade.

Mr Henry said Australia’s recovery would also depend on the pace of global recovery.

And he warned against the premature withdrawal of government stimulus measures, either in Australia or overseas.

The shape of Australia’s – eventual – recovery became a little clearer yesterday.

That happened in Federal parliament, when the Prime Minister Kevin Rudd, answered a question put to him by a West Australian Labor backbencher, Sharryn Jackson.

Ms Jackson had asked about developments that had occurred just an hour before question time began  in Parliament, at 2pm.

Mr Rudd said Chevron Australia had just signed three huge deals, to sell gas from its giant Gorgon project, to Japanese and South Korean customers.

He said, too, that Gorgon was just one of 80 resource projects, now under consideration in Australia.

“I am advised that these contracts could deliver up to $70 billion worth of exports over the next 25 years,” the Prime Minister told parliament.

“These are massive projects, that will generate prosperity for years to come,” Mr Rudd added.

He said the Gorgon project, alone, could create 6,000 jobs, in its construction phase.

There would be environmental benefits, too, Rudd said.

“Throughout the Asia Pacific, Australian LNG will  be increasingly important as a reliable, secure, clean energy source to power continued economic growth,” he added, in a statement issued later.

He said Gorgon is now set to become Australia’s biggest single infrastructure investment.

No-one is happier than the Prime Minister, himself, about Gorgon’s bright future.

The global economic crisis has left a huge hole in the Federal government’s revenues.

But it estimates that the Gorgon project, alone, will soon be boosting its revenues by some $40 billion a year.

So what does all this mean to you?

As a West Australian, your correspondent can assure you that money spent, on big projects like these, soon finds its way into the broader economy.

And Chevron is expected to spend some $33 billion, in the construction phase of its Gorgon project.