Big miss in GDP

The Australia Bureau of Statistics (ABS) just released the National Accounts data for the December quarter of 2011, where Gross Domestic Product (GDP) increased by 0.4% seasonally adjusted versus 0.7% consensus, and 2.3% over the year, still below trend compared to the pre-GFC era:

Looking through the results, real (adjusted of inflation) net national disposable income  actually decreased 0.9%, but over the year grew 4.9% compared with 2.3% for GDP:

The terms of trade fell 4.7% in seasonally adjusted terms in the December quarter following a 3.2% increase in the September quarter:

The household savings ratio remains high at 9% in seasonally adjusted (and trend) terms:

The economy remains on trend – to grow at or below 2% in real terms, as the Federal government adheres to a budget surplus and households continue to dis-leverage.

More to come…


  1. huge miss! here come the rate cuts. Data once again proving stevens and the RBA have no idea what they are talking about. AUD knows exactly whats going on though. short the AUD

      • Yes.
        Still a 50% chance of the RBA standing still in April. The zeitgeist from those people suggests they’re living in an alternate universe.
        They’re a weird mob.

    • > Data once again proving stevens and the RBA have no idea what they are talking about

      GB, after the January jobs number you were on this very forum apologising to Dr Stevens. You’re up and down like a yo-yo mate.

      • thats because i said they should be sacked. that was probably abit harsh and thats what i apolgised for.

    • When I find the time (hah!) I’ll compute the more important per capita GDP figures, which are WAY WAY below trend and showed the real story, which I did before Xmas.

      • Looking forward to that Prince.

        More scary would be GDP per capita in the south-east “slow lane” of the two-speed economy. Scarier still would be GDP per capita in the manufacturing belts of the south-eastern capitals.

        But who cares about those people. Iron ore to the moon!

      • Good Idea. GPD per capita by State. Anyway, to me the idea that GDP is reported at all (as opposed to focusing on per capita) is highly misleading.

      • GDP per capita in Tasmania must be going gangbusters at the moment!

        I’d like to see GDP per capita in the tourism areas of Qld as well (Gold Coast, Sunshine Coast and FNQ).

  2. Yep looks like my call for ~2% growth a few months ago will be right on the money while treasury/RBA were estimating 4%.

  3. Low growth = interest rate cuts = property prices to the moon!

    That’s how it works right? As opposed to strong growth = rising incomes = property prices to the moon..

  4. A negative GDP per capita in a two speed economy means the heavy cost of adjustment is falling entirely on the suburbs.

    Consumers are sloughing interest-bearing debt as fast as they can. They are in no mood for risk.

    Housing stock on the market continues to rise.

    Recession by June. Shudder.

    Don’t Buy Now!

    • Consumers are sloughing interest-bearing debt as fast as they can.

      correct and most of that debt is mortgage debt. but with house prices falling faster than most can paydown the mortgage they arent actually deleveraging at all. just running harder and harder to go backwards at a slower rate.

      • Spot on, GB!.. “.. they arent actually deleveraging at all – (I thought we were in the ‘dis-‘ camp on this site! No matter; still , Spot On!)

      • i reckon the household finances is the real shocker and shows how leverage cuts both ways. great on the way up but not so great on the way down. look at the tiny amount of household deleveraging vs the disproportionally large fall in house prices. expect to see much more of this.

      • why mind numbing? people who think the share market is lead by the housing market are the brain dead ones.

      • 4 banks are 25% of the ASX. 4 Banks that are exposed to the housing debt to gdp of almost 100%. One bank has $340B on its mortgage book? Which bank?

        The one I bought ATM puts at $51 and today crossed $48.

      • vraptor, you are trying to bridge a gap that may not exist. house price falls will only result in bank losses if they end up in default. conversely falling house prices will stimulate demand for (smaller yet still profitable) mortgages. shorting banks is a very crowded trade. i can see why but im just not sure its a great idea. abit to “johnny come lately” for my liking.

      • “Consumers are sloughing interest-bearing debt as fast as they can.
        correct and most of that debt is mortgage debt. but with house prices falling faster than most can paydown the mortgage they arent actually deleveraging at all. just running harder and harder to go backwards at a slower rate.”

        SPOT ON GB

    • Construction is already in recession for a while now – housing spruikers might say that is the silver lining.

      PS: Where is Peter Fraser when you need pile on em.. :p

      • He is buying shares in Kleenex as there are alot of tears to be shed in the coming months / years.


  5. It’s about time that we acknowledged that economists have no idea what is happening in the economy nor can they efficiently control it. They currently have too much influence.

    As a result of ongoing fantasy forecasts by the RBA they have had IR far too high (Cue Mav and Flawse for an inbound bogey).

    Many businesses have already gone to the wall along with families and relationships. Many, many more will follow. Can not understand why unemployment figures are improving/stable. When unemployment does accelerate up there will be tears and many disillusioned homebuyers who will find that despite house prices falling they will not be able to buy due to being unemployed, underemployed or not in a secure job.

    • outsidetrader

      I’m not sure why everyone’s being so harsh on the RBA – we’ve just seen that they cut interest rates twice in a quarter where GDP grew by 0.4% – that seems like an appropriately accommodative monetary policy response to me.

      Whether or not rates should have been left on hold in February and March remains an open question, and one that can’t be answered in any definative sense until we see then next GDP read in 3 months time. But given the data they had on hand at the time they made their decisions I think the RBA’s been doing a pretty solid job in difficult circumstances.

    • obiwan “Can not understand why unemployment figures are improving/stable.”

      In terms of aggregate hours worked, they’re not. Aggregate hours worked for February will be released tomorrow.

    • Bobby Fischer

      Interesting reply obiwan. I found this comment elsewhere which raises some valid questions i.e. should we allow economists to even have their hand on the interest rate lever?

      “It is considered absurd (as it should be) that government or any central authority should set the price of goods, from how much a farmer should be paid for his corn crop, or how much a CEO should be paid. More than a cursory thought indicates that this should be left to the market to set a clearing level and if the price/margin is too high it will spur increased competition and bring the margins down.

      Why is money any different? Interest rates are simply the ‘price’ of money and inflation a hidden tax on society to the benefit of the banking industry.

      Why not abolish the RBA and let the market determine its own interest rates? Isn’t the reason why the entire world is rooted in so much debt is due to the fiat currency that we are forced to use, and the price of money being too low, i.e. interest rates? Greatly incentivising excessive leverage, borrowing whilst penalising saving and investing.

      Everyone cheers when a rate cut is announced, what of the savers? Screw those guys right? Leverage up, blow the debt bubble a little larger. Sound money, with the market determining rates is the healthy, sane and logical thing to do if anyone understands and thinks about how the system works.

      Too much borrowing in the system? Interest rates will naturally rise as there is a demand for money that cannot just be ‘created’. No borrowing and the banks full of savings? Plenty to borrow, interest rates low. It really is that simple. Some rudimentary understanding of monetary history and basic economics should be on every ones list to learn about. Particularly now.”