Chief Economist Keri M Knudsen at Sparebank 1 SR-Bank is far from completely bleak about the outlook for Norwegians’ wallets.
We live in a time when there are both positive and negative things. But I think the negative news probably gets a lot of attention. There are a lot of positive things that don’t get much attention. There is no balanced picture right now, and it can affect the way most people think about their finances and the money of others, says Knudsen, continuing:
If too many people become anxious on the wrong basis, that in and of itself can create a negative spiral.
He says that the great interest in the negatives could be due to several factors. We have the tragic war in Europe, and you are living something amazing that you haven’t experienced in a long time.
– These matters affected many wallets due to the rise in electricity prices, inflation and interest.
Knudsen’s first positive message is that home values have skyrocketed.
Yes, more than 20% increase in value in the last two years. Add to that the fact that three out of four of us own their own place of residence, which is quite unique on an international level.
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– Don’t get depressed
People should not be depressed now this fall, because this crisis we are in now is very artificial. During the year, Norway became richer with higher energy prices, and the dollar exchange rate rose significantly. It is expected to remain at a high level throughout the 2020s, says chief economist Jan Ludwig Andreassen at Ica.
He explained that the last time oil prices were at $100 a barrel was in 2014. Then the dollar exchange rate was 6 kroner.
– Then the price of a barrel was 600 NOK. It was high because the average for this millennium is 450 NOK per barrel. But today, oil prices have exceeded 1,000 NOK per barrel, and the whole increase is pure profit.
Ludwigsen adds that there are much higher dollar prices for metals, gas, and many other things.
– As for energy prices, we have the futures markets very early in time which are pointing to a much higher level than usual in the 2020s. This means much more income for Norway than we thought.
Ludvigsen asserts once again that the crisis is artificial.
– Because we are pursuing an economic policy that causes us a crisis. We could have avoided that, he says, and he continues:
All problems are temporary. Housing prices will rise, wages will rise, and tax levels will fall. So it looks like the 2020s will be a lot more fun than we thought a year ago.
Total unemployment, which is the sum of the total unemployed and job seekers as measured, at the end of October was 56,300 people which is equivalent to 1.9 percent of the labor force.
It’s actually the lowest level in nearly 15 years.
The labor market in many industries is narrow, and it is difficult to obtain qualified labor. It might sound a little intimidating, but that’s positive for you as a winner. Indeed, unemployment has not been as low as it is now, since 2008, as Danske Bank consumer economist Thea Olsen explains to Nettavisen, and continues:
Therefore, if you are not happy with the job you are working in now, or you think that you have poor circumstances, there are more chances of success in changing the job than it was before. The low unemployment rate can be a huge advantage for you if you want to look for another employer.
Peak interest rate in December
– Olsen says that an increase in interest rates could be cause for concern.
She went on to say that it is therefore important to remember that the interest rate was abnormally low, and that it is a sign of the health of the Norwegian economy that the interest rate level has become normal.
Now the prime rate is higher than what Norges considers a normal rate level, but that’s also why they’re now likely to advance more slowly with the rate setting.
Olsen believes that the interest rate peak will be reached in December.
Norges Bank warns that another rate hike is likely in December. After this rate increase, our chief economist at Danske Bank, Frank Gollum, believes that the peak of interest rates has been reached in all likelihood. It’s basically good news for the wallets of those households with debt.
Many of them have good advice
Knudsen’s third point is that the economy is back on track after the pandemic.
Think about how the pandemic has affected our lives in a negative direction. It has limited our freedom and our economic decline and uncertainty. It’s only been nine months since everything closed. Many companies were on their knees. The only thing that was higher than the number of injured were the layoff notices. And those who lost their jobs in the first place needed it most. But we’re already on the right track, back to normal, and that’s fine, he says, and continues:
The Norwegian economy has grown and is at a higher level than it was before the pandemic. Jobs are back, job growth is up and unemployment is at its lowest level in 15 years. There are many vacancies.
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Another positive thing about personal finances is that most people have good advice specifically after the pandemic.
The average Norwegian had extraordinarily low expenses and extraordinarily low interest rates, while at the same time an unusually large number of people still had work, he says, and explains:
This means that many people have an unusually large buffer stock in the bank at the moment.
Olsen at Danske Bank is behind this.
The largest proportion of Norwegian families will be able to deal with the financial situation in which they now find themselves. This is of course good news for those in financial control, but it also means that there is a certain percentage of whom this will be difficult. This is where the biggest focus now lies, she says.
The energy crisis is positive for Norway
Hence it is not about the country we live in. Knudsen points out first that Norway is an energy-powered country and how this is a positive for most people.
Today’s bleak backdrop and the energy crisis show how important actual energy is to all modern societies. The goal is safe, affordable and as green access as possible. To sustain society, businesses and individuals, energy is absolutely essential, in all colors and shapes.
– In any case, energy is probably the most in-demand commodity in the world and is doomed to be so for the foreseeable future, Knudsen continues.
This gives Norway good chances.
For us, it will contribute to increased activity and more jobs in the energy sector. Supports the Norwegian labor market, which contributes to good income for the state treasury. Solid state finances provide security and durability for the Norwegian economy and jobs, and thus are fun for most people.
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The background is present in the form of the Ukraine war. This was also emphasized by Equinor CEO Anders Opedal during the presentation of third-quarter results presented on Friday.
There, Equinor, of which the state owns 67 percent, set another record result.
Today we present very powerful results. Unfortunately with the bleak background in Russia’s war against Ukraine, Obidal said during the quarterly presentation, adding:
– With the sabotage of the gas pipeline and the increase in the activity of drones, the war approached us.
Read also: Equinor chief: – War is closer to us
The best safety net in the world
And when it comes to money, the oil fund has something.
We have the largest fund of funds in the world. The size of the oil fund is now 12,000 billion NOK. The average for each of us is 2.3 million NOK. Moreover, we now have extensive training in managing this fund of money in a way that benefits all citizens, says the chief economist.
Highlights of the good safety net we have in Norway:
– If all goes well, we have Nav. We have perhaps the best safety net in the world, which everyone envies.
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