An awfully bland miracle

The RBA made reference to the likelihood of a negative print when Q1 GDP is released on the first of June so I thought I would visualise what a negative number. Without positive revisions to previous quarters this would take the annual rate below 2%:

While we were the only developed nation to avoid a recession, our growth rate on this basis will be around those of the US, UK and Eurozone, some miracle:

Finally with the RBA expecting growth at or above trend, circa 4% in 2011, a negative Q1 would require robust growth across the remainder of the year to reach that level.

Comments

  1. Awfully.

    It will be interesting to see the RBA hike immediately prior a negative GDP number. I wonder how that will affect confidence in the housing market?

  2. Three more negative house price quarters and we may see recession by the end of the year. Our economy is addicted to housing; not even mining will be able to save it if housing goes down quickly

  3. Consumer spending is the canary in the economy in my view. In dealing with the major department stores I can convey they are very concerned. The retail sector is THE major employer.

    Prices are being slashed to attract punters, profits are down, internal cost cutting has gathered pace and suppliers are being squeezed for better deals. If it wasn’t for the high aussie $ there’d be a different set of dynamics at play out there.

    As I said in an earlier post, commercial real estate has began falling and I believe it will fall at a greater rate and depth than housing. Furthermore, there’s also concerning amount of people’s superannuation exposed to this segment.

    • Considering the banks are deleveraging their commercial property lending, I think you have something there Nod.

      Check out today’s and yesterday ANZ/WBC result summary.

      Interesting to watch NAB’s earnings: they are supposedly the poster boys for commercial/business lending.

    • Close, but not quite. Stagflation generally requires a “high” rate of inflation, and a lower rate of growth (but both are still positive).

      In your more broad definition, stagflation could also occur when inflation is at 0% and growth at -1%, which is not the case.

      I would think that stagflation would require a rate of inflation that is significantly above the 3% band targeted by the RBA, such as hitting 10%+ inflation back in the late 70s.

      The wikipedia article on stagflation is pretty decent.