It's not all doom and gloom

In The boom that keeps on giving Michael Pascoe looks at recent economic data and concludes that things aren't anywhere near as bad as many commentators are saying.

According to the research discussion paper by the RBA's Leon Berkelmans and Hao Wang, China's extraordinary surge in housing construction will indeed peak and then fall back — but the peak isn't expected until 2017 and it should then stabilise at elevated levels, not falling back to the current amazing level until some time around 2030.

The authors very reasonably point out that such a forecast is based on a number of assumptions and that there are downside risks, but there are risks on the upside as well. It's the sort of thinking that has the RBA suspecting our terms of trade will remain historically high, even as last year's bubble prices have been blown off the top of the boom.