You might have heard the Australian economy is enjoying an unprecedented run of economic good fortune. Last quarter's GDP numbers gave us a little scare, but economists are pretty sure the next data will show positive growth. A few more, and we'll claim the record of the longest stretch of time without a recession from The Netherlands.
Sure, it's been a little bumpy. We've had to deal with the fallout of the dot-com bust at the turn of the century, the Asian Financial Crisis (remember that?), the GFC and an almighty mining boom and bust. But it seems likely we'll continue to avoid recession. Which is impressive in itself, but even more so when you consider that the average economic cycle is around seven years. By rights, we should have had two recessions during that time, and be coming up to a third.
![Marcs and David Lawrence collapsed recently.](/web/20170210064550im_/http://www.theage.com.au/content/dam/images/g/u/3/k/d/3/image.related.articleLeadwide.620x349.gua7y2.png/1486704488968.jpg)
Such unbroken prosperity should see most Australian businesses doing well. Yes, yes, it could always be better; just ask the Business Council of Australia or the Australian Chamber of Commerce and Industry. But then, lobby groups are always going to say that.
But such success masks, as averages must, the challenges facing individual businesses. As the old joke goes, an economist with one hand in the oven and other other in the freezer will tell you that, on average, he's very comfortable.
Wedded as humans are to making stuff, most of the headlines are given over to the closure of mines and manufacturing – witness the coverage of the sunset of our car industry – but the pain is also being felt in retail, too.
The most recent news is that the company behind the Marcs and David Lawrence fashion brands has been placed into administration, and that's not long after we heard that children's clothing retailer Pumpkin Patch would close its doors, and low-priced footwear seller Payless Shoes was heading the same way.
Retail is a very simple business. But that simplicity means barriers to entry are low and competition fierce. So while it's a simple business model, it's also devilishly difficult to do well. And that's what the averages won't tell you.
It's also the danger facing investors who don't look closely enough at businesses. It's very tempting to look for big picture signposts. And most of those signposts – indeed, the ones that get most of the publicity – are large scale, macroeconomic indicators. They're the ones we all talk most about and the ones that are supposed to tell us how things are going: GDP, economic growth, unemployment, wages. Even the next layer – think retail sales, consumer confidence and business investment – tell us a lot about the average, but not much about the specific.
And like the man who's a jack of all trades, but a master of none, that's a very dangerous way to invest.
We're spending more than we did a few years ago. Our economy is larger. Interest rates remain low and unemployment is in check. As a nation, while we could always wish things were better, we're doing pretty well.
On average.
Foolish takeaway
Even in a growing economy there are winners and losers. Our car makers are shutting up shop. The video stores are almost entirely gone. And the consumer dollar is being fought for, hammer and tongs.
Tastes change. New competitors arise and arrive from overseas. Just as there's a difference between climate and weather, economic growth and business success are only slightly related. Knowing the difference can be vital.
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Scott Phillips is the Motley Fool's director of research. You can follow Scott on Twitter @TMFScottP. The Motley Fool's purpose is to educate, amuse and enrich investors.