Question: ‘Do you expect business conditions to improve in the next 12 months?’
Answer: ‘Well, we’re in the worst recession in a life-time but everyone says it’s coming to an end and our prospects are looking a bit better, obviously that’s going to be better than now – so, yes’
Headline: ‘Business confidence hits record high!’
The question is akin to being asked at midnight whether you expect it to be warmer in 12 hours’ time. Everyone’s going to say yes – doesn’t mean we’re going to have a scorcher.
Of course business confidence is at a record high, just as it was recently at record lows. That doesn’t mean we should look forward to strong growth. All that a big business confidence foreshadows is a large degree of change in the economic growth rate, not that growth is going to be fast. Yet the way the media reports it you would think that’s exactly what it means.