Fed: Stimulus packages will help retailers tread water: Access
By Colin Brinsden, Economics Correspondent11 Mar 2009 12:01 AM
Eds: Embargoed until 0001 AEDT Wednesday, March 11
CANBERRA, March 11 AAP - The federal government's stimulus measures will enable retailers to tread water in what is an increasingly ugly economic backdrop, a leading independent forecaster says.
Centrelink will start doling out payments to families from Wednesday as part of the government's $42 billion nation-building package, while taxpayers earning less than $100,000 will start receiving their cash handouts next month.
Access Economics says the government's initial stimulus package, which gave out money to pensioners and low-income families just before Christmas, did help to lift retail spending in December, which was by far the largest month of growth in 2008.
"The economic backdrop continues to get uglier, so these measures are likely to only result in real (inflation-adjusted) retail spending treading water in the first half of 2009," Access director David Rumbens said.
"Indeed, Access Economics sees little growth in real retail spending being realised until the second half of 2010."
Access estimates that the first package of $8.7 billion of handouts delivered between $700 and $900 million in additional retail spending in December.
Using the same ratio for the second package, Access expects an extra $200 million in retail spending in March and $600 million in the June quarter.
Rising unemployment and falling house prices will be the two major detriments to retail spending in 2009, Access said in its quarterly retail forecasts.
Based on Treasury's forecasts, Access expects 300,000 people will join the ranks of the unemployed in 2009.
"That means a big loss of labour income, and will serve to keep consumers ultra cautious with any spare cash they may have," Mr Rumbens said.
Access expects house prices to fall a further five to 10 per cent in 2009 after the three per cent drop in 2008.
"House prices in the US, UK and many other developed economies have fallen by much more so there is the risk of a notably worse scenario for retailers," he said.
"Either way, retailers face a tough road ahead."
He said many retailers in the discretionary end of the market have already started to trim staff.
Access is forecasting real retail sales to grow 0.8 per cent in 2008-09 and by just 0.2 per cent in 2009-10 after 4.5 per cent growth in 2007-08.
It expects a modest recovery of 1.7 per cent in 2010-11 assisted by stronger housing activity.
Sharply lower interest rates will support spending in the mortgage belt states of NSW, Victoria and South Australia, as well as in the ACT, but they will also suffer their share of job losses.
"It is the resource rich states that will bear the brunt of the lost income from the slowdown," Mr Rumbens said.
"The unwinding of the commodity and mining investment boom will take the lustre out of the Western Australian, Northern Territory and Queensland economies over the next few years."
