ECONOMISTS are determined to be gloomy about this year. They tend to be good at that.
Yet the profit reporting season suggests things aren't as bad as they had thought, and don't seem to be getting any worse.
Sorry, but I'm with the economists on this. The profit season has only revealed the short-term gains of shedding staff and shelving investment, not a buoyant economy driving sales.
Similarly to the market, economists hunt in a pack led by the official forecasts of Treasury and the Reserve Bank, which have an indifferent track record. Budget surplus, anybody?
Anyway, those forecasts show the economy slowing from 3.5 per cent growth last year - though more likely it'll have been 3 per cent unless the December quarter shot ahead 1.1 per cent, which I wouldn't bet on - to 2.5 per cent.
So you can see where we're coming from. The economy was doing well this time last year - funny, I can't remember that - until about May, and has been on a slippery slope ever since.
Worse, gross domestic product per head, a much more sensitive measure of how the economy feels, was even on the verge of recession in the second half of last year.
We don't know about the December quarter yet, but nothing in the profit reports suggests it shot the lights out. More like switched them off.
No wonder everybody thinks unemployment is going to rise.
But that's the odd thing: despite sub-par growth, it has barely budged. The unemployment rate is hanging about 5.4 per cent, a bit higher than a year ago.
For all the corporate downsizing and public service freezes, the number of jobs rose 85,000.
You wouldn't hang your hat on that; the unemployment figures are notoriously volatile and prone to revision. And fewer people are looking for work, as shown by the fall in the participation rate, probably because those who delayed their retirement have seen their super recover.
Even so, if the participation rate hadn't dropped, unemployment would still be comfortably less than 6 per cent.
But is it getting worse? Unemployment will take a while to show up in an economy that has been in a funk since at least the second half of last year. Also, the biggest hit has been to white collar jobs, as shown by a surge in office vacancies. Fewer employees require less space, after all.
Another sign is that the growth in wages has been modest, though still above the inflation rate, which suggests households are ahead. Combined with low interest rates, that could spur spending on and stimulate the moribund home-building industry. At least that's what the Treasury and Reserve Bank are counting on.
The trouble is they're not forecasting growth to pick up until next year. The only thing that could bring this timetable forward would be a slump in the dollar. While every other country is devaluing by printing more of its currency, ours is destined to remain overvalued.