It may well be the season to be jolly

The Christmas decorations are already up at our local Westfield and Santa even popped by the other day despite it still being November. But he got me thinking about what kind of Christmas this is going to be and, more to the point, who's going to be able to afford it.

While economists make it sound like it'll be pretty bleak, the sharemarket is well into the spirit, or spirits, as the case may be. In fact, retail stocks are almost looking hot.

Remember the two-speed economy when mining was forging ahead and manufacturing was being squeezed?

Well, we seem to have moved on to a different dual economy. In this one consumers are willing and able to spend - provided, that is, there's a sale or a bargain on offer - but business owners won't do their bit and invest.

This seems strangely back to front considering Treasury and the Reserve Bank are forecasting unemployment will be rising for another year, hardly a morale booster for would-be spenders.

At the same time, the dollar's drop should be good for corporate Australia, chuffed as it is by the change of government in Canberra to something more pro-business, or at least less anti-everybody.

Really, there's much to be encouraged by. Interest rates have never been lower. Those with mortgages are typically well ahead in their repayments. Better still, if you've paid the home off, or have an investment property, there's the prospect of a decent capital gain for the first time in yonks.

Self-funded retirees are feeling the pain of low rates but for some the rebound in property and shares is more than making up for it. That's certainly the case for most super funds.

Even though the sharemarket is due for a correction, especially the booming bank stocks, it's likely to be short lived.

That's because the central banks of the US and Japan are pumping out money like there's no tomorrow, which, come to think of it, is how they see things.

Whether all this liquidity pours into Wall Street or leaches out to other sharemarkets, one way or another it lifts all boats, including ours.

Naturally this also tends to devalue US dollars - and lift the prices of anything denominated in them such as iron ore - since a lot more of them are in circulation. The market has more or less come to accept the fact that money printing can't go on forever, especially when the signs are that the US economy is picking up steam, and so the US dollar is returning to favour.

The consequent downward pressure on our dollar, which will lift prices, is a downer for consumers but even that has its compensations. The lower the dollar falls, or to be more accurate the higher the US dollar goes because that's where the real action is, the less likely it is that jobs will be destroyed.

You'd think the fact that unemployment is rising would be sapping confidence, but so far so good.

Even though the full-time unemployment rate has climbed from 6.1 per cent this time last year to 6.6 per cent, that's represented a loss of only 59,000 out of 8 million jobs.

How can that be? Because as the population ages, fewer are seeking jobs in the first place. You can see this in the overall unemployment rate, which has only inched up from 5.5 to 5.6 per cent.

That's why Christmas will have more good cheer than economists are allowing.

Read David Potts in Weekend Money, with

The Sunday Age.

Twitter @money potts