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With interest rates and unemployment low, there are economic positive signs all around

With interest rates and unemployment low, there are economic positive signs all around
With interest rates and unemployment low, there are economic positive signs all around

In the 30 years or so that I’ve been running businesses, I’ve noticed that consumer sentiment is often created by a cultural environment rather than what is actually happening in folks’ lives.

This can work in favour of over-exuberance, or it can create gloom. We’re currently in one of the negative phases, but there’s another way to treat the “bad” economic news, and that is to see a free market economy as something that forces the constant reinvention of just about everything.

I’ve been watching the financial troubles of the Darrell Lea chocolate and lolly brand, which has been in administration. Letting go 418 people is not a good thing, however the system works well enough for a new owner to step in and buy Darrell Lea and reinvent what that business does.

The signs of positives defying the negatives are all around us. Yes, Kodak went out of business, but other companies have reinvented personal photography with affordable, high-quality cameras that don’t require film. And Australian steel-making may be under pressure, but there was OneSteel, quietly making itself a miner of iron ore, not letting itself be forced into irrelevance.

Australian business owners and householders can train themselves to think this way as well. There is a way forward out of adversity: you just haven’t found it yet. It could be as simple as rethinking what you sell. The ability to up-skill, find another job, reinvent yourself as a different proposition to an employer, has never been better.

Take the uncertainty created by the European crisis and the US slowdown. It has played on our minds and held back our own economy, but one of the benefits has been a cash rate that – at 3.5% – is in the lowest range of the past 20 years.

How good is this? Ask any baby boomer who was paying 19% on their first mortgage.

There are many people suffering right now, but I urge people to have a look behind some of the negative economic stories: inflation ran at around 1.2% for the year to June, and the wage price index was sitting at 3.6%. So wages are increasing at a greater rate that inflation.

That isn’t bad, especially taken with a low unemployment rate of 5.2% in July. Compare it with the United States at 8.3%, or the EU at 10.4% unemployment in July.

And in a country where we all need a car, they are more affordable than they’ve been for a long time. A Ford Falcon in 1960 cost a man 60 weeks’ pay, while in 2012 it cost 30 weeks’ average male pay.

The economy will cause more businesses to close or to contract. But the important part is: what happens next? And in your own life, are you keeping your eyes open, preparing yourself for what happens next?

A market economy always provides the chance to start again. What’s your reinvention?

Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.

Mark Bouris

Mark Bouris

Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.

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