Interest rates are up, petrol prices are up, rental prices are up...it's no secret that times are tough for many Australians at the moment. Consequently, I've had many people ask me over the past few months whether this means Australia is headed for a recession.
Well, according to most economists I know, the good news is we're not.
Unlike the United States and many European countries, I reckon Australia is strong enough to fight off a major downturn, regardless of the slowdown in consumer and business confidence over the past six months, for a number of reasons.
Firstly, our close connections with China and their insatiable appetite for our resources, is keeping our economy chugging along nicely. Most economists would probably agree that this boom is likely to continue for some time yet.
That said, on the flip side, some economic commentators are warning about a potential slowdown of the Chinese economy over the next 12 to 18 months, which could cause a rapid slowdown on our shores. Figures out this month found the Chinese economy grew by 10.4 per cent in the first half of the year, which was down two per cent from the 12 month period.
Still, I'm not as pessimistic and I reckon double-digit growth out of China is still pretty solid and will keep us afloat for some time to come.
Secondly, the Australian economy is in pretty good shape. Just take the job figures released last month. The nation added close to 30,000 more jobs last month, with the unemployment rate dropping to 4.2 per cent, close to a 30-year low. What's more, the federal government has got plenty of cash in its coffers at the moment, announcing a budget surplus of $21.7 billion in May this year. That means the government has plenty of dosh to throw at the economy if we saw things rapidly slowing down.
Thirdly, we have room to move on interest rates. We all know mortgage holders are under a large amount of pressure at the moment due to the back-to-back rate rises seen over the past year, but the Reserve Bank can cut rates to stimulate the market again, if we see a major downturn like that in the US.
And finally, the stock market. While we've seen a major correction over the past six or so months, it's not as bad as it could be. Take the Shangai stock market for instance. It's down more than 50 per cent since the start of the year, and India has sliced off 40 per cent.
So, hang in there, prepare for more hits and don't panic too much. Although it might seem tough at the moment in Australia, things could be a lot worse.