Two strikes from recession, not three

Lindsay Tanner's claim reads like part of a narrative that has been prepared by the Rudd government.

"The challenge for the government now is that whereas Hawke and Keating had ’86 terms of trade, ’87 stock market crash, ’90 recession, we’ve had all three, in effect, within the space of about a year and all feeding off each other in various kind of negative synergy ways." Extract from Business Spectator interview with Finance Minister Lindsay Tanner

But the three-strikes story isn't true.

The recent slip in our terms of trade is a blip on the back of a mighty, historic rise. The chart shows the record to December 2008 (source here).

There's certainly some more softening to come when the data for 2009 becomes available. But if there's one thing that is working to our advantage in the current international slump it's the historic level of our terms of trade. Australia's export dollar continues to command a more imports it has in your lifetime or mine.

The Business Spectator interview is also notable for an admission that the Rudd cabinet simply 'made up' the budget for the National Broadband Network (NBN). It's depressing to learn that policy-based evidence is still a feature of infrastructure planning.

Tags for this entry: trade data macroeconomics recession