Compared with the US, Europe, Britain, Japan and New Zealand, the economy is buoyant, but it's slowing as the financial turmoil and the impact of the higher interest rates and petrol prices continue to take a toll on the levels of confidence and activity.
The reality for the US is that the bailout was needed, but just to staunch the damage in financial markets. The real issue is the economy; in the US, Europe and the UK it's tanking and tanking fast.
Figures out yesterday here showed private credit growth continued to slow in August, as did building approvals, while retail sales were said to be a little stronger than previously thought.
So there's a rising push and belief that major central banks could cut their key interest rates in a co-ordinated fashion, possibly in the next few days.
Macquarie Bank interest rate strategist, Rory Robertson suggests that the chances of a half a per cent cut here in Australia have firmed.
"After Monday's sharp US market declines - now in the process of spinning around global markets in Tuesday's sessions - the case for large synchronised global rate cuts seems strong. Indeed, the case for large synchronised global rate cuts is stronger than ever before, and little else seems available at present to slow the "adverse feedback loop" threatening to stall the global economy, or worse.
"Whether synchronised global rate cuts will happen or not, I do not know. On the positive side, one suspects that the ECB, the BOE and other central banks now have, like Dallas Fed President Fisher, come belatedly to the conclusion that "inflation" no longer is the main threat to their economy's long-run health."
"There's obviously an increased chance that the RBA's 7 October cut now will be 50bp (to 6.5%) rather than just 25bp. The case for the larger 50bp RBA cut simply is that the outlook for local and global growth continues to darken - and (so) the outlook for lower inflation continues to brighten - as the global credit crunch intensifies."
Those figures from the Reserve Bank showed a further slowing in private credit in August as activity continued to ease in the economy and demand for credit slumped.
The bank said that total private sector credit rose by 0.5% over August following a rise of 0.6% over July. Over the year to August, total credit rose by 10.5%, the slowest rate since 2002.
Growth in credit for housing slowed again to 0.4% in the month and 9.4% over the year to August (both investor and owner occupied fell). That was the slowest since 1983.
Personal credit fell for a third month in a row: down 0.4% vs. 0.7% in July, the slowest since 1994.
The reason was another fall in margin lending as the slumping stockmarket forced margin calls from lenders to investors. Growth in business credit slowed, rising 0.6% in August (0.9% in July) to be up 13.6% through the year, compared with the 15.3% annual rate the month before.
Australian Bureau of Statistics figures showed retail sales grew 0.3% "in trend terms" in August and the previous three months, but building approvals fell sharply, down 3.7% in the month as demand from owner/occupiers and investors fell.
That was after a 2.4% drop in July.
But the impact was worse than it seems from these figures as the ABS said there was a double digit drop in the value of buildings approved with investor housing approvals down more than 20% and the value of renovations off sharply as well.
"The seasonally adjusted estimate for the value of total building approved fell 12.6% in August. The seasonally adjusted estimate for the value of new residential building approved fell 1.6% in August. The seasonally adjusted estimate for the value of alterations and additions fell 12.4%, and the value of non-residential building fell 23.8%."
Figures from the Reserve Bank showed a further slowing in private credit in August as activity continued to ease in the economy and demand for credit slumped.
The falling level of home approvals suggests the economy will continue to slow after growing at the weakest pace in more than three years in the June quarter.
Building approvals dropped 8.6% from the same month of 2007.
Demand for housing was hit by the RBA's two interest-rate increases in February and March, which took the overnight cash rate to 7.25: the RBA cut that by 0.25% last month.
But banks are still charging upwards of 0.6% more because of higher market funding costs and those costs have intensified as the credit crunch has turned into a lending freeze in the past fortnight, forcing up the cost of short term money here and around the world.
