Happy GDP reporting

At the Australian:

At the AFR:

At BS:

Now, look at this chart from the ABS of the direct inputs into the GDP figure:

Notice the largest contributor by far is GFCF-Pub. That is, Gross Fixed Capital Formation – Public sector.

This was achieved in part by an unspecified transfer of assets to the public sector for as the ABS put it (h/t Bearish):

“The public non-financial corporations sector took ownership of some large capital projects that were completed during the December quarter 2012.”

Without this contribution the economy shrank yet not one story in the above papers mentioned the surge in public GFCF. It’s all well a good making the business reader feel their input is of value but not reporting on government investment, whether good, bad or mysterious, is hardly accurate.

Don’t mention the war, I guess ( I note that the SMH has it right).

David Llewellyn-Smith
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  1. Would private be so negative with the transfer though?

    – to Private
    + to Public

    Seems reasonable to me.

    • Fair point. May have shrunk is better. But we don’t know how big the transfer was or where it came from. Should still be mentioned, which is my main point.

    • Isn’t the question “would the private sector have engaged in this spending at all if no transfer to government was imminent?” The question might be more easily answered when we know what the spending actually was. The private sector does not build desal plants of it’s own volition then attempt to sell water.

      • But I might have that wrong – rumour I hear is that is EXACTLY what happened.

        I guess all will become clear in time.

    • You would think not. But we don’t know how large the transfer nor where it came from. I will add it was not Federal government. That’s my point. Might be nice to know, yes?

  2. Mr SquiggleMEMBER

    So what was the asset? do we know yet?

    maybe the bits of the NBN that have been built so far?

  3. VIC SA TAS ACT are in technical recession. The collapse in Stamp Duty from severely contracted property sales means those state coffers are empty and politically sensitive credit ratings at risk if they borrow one dollar more.

    That crusty old Tory Henry Bolte would have known what to do: borrow and damn the rating agencies. He had a state to build.

    • That’s what we have been doing for decades including the Bolte period. Maybe you could still do it somehow if all your other policy settings weren’t so anti investment and production. Currently such ploicies would be a disaster that just resulted in more debt.

      • Do asset sales such as Australian business’s and mines add to GDP somewhere along the line?

        Hold it up more than it would otherwise be? I’d ove to be steered to some links or what to Google.

  4. The Doc’s at it again:

    “Encouraging GDP data confirms likely bottom of interest rate cycle. About-face to come soon from negative commentators who got it so wrong.”

    • From memory the Doc’s predictions werent so hot last year.

      But I suspect it’s not getting things wrong that’s he’s really critical of, it’s being negative. Particularly if there’s anything negative said about property, that seems to hit a raw nerve with him.

  5. Barnaby Joyce would be a national hero if he wasn’t trying so hard to conflate public and private debt.

    What are you going to do about huge mortgages and debt-slavery, Barnaby?

    • DC, like many you are putting words in Joyce’s mouth. Most unfair – he stumbles enough getting his own words out coherently.

      I’ve never heard him conflate the two. He (like many) simply doesn’t refer to private debt at all.

      As to your question, the answer is “nothing”, of course. The joys of our glorious political system. Say anything about real core problems = public vilification, thence demotion. Not good for one’s career prospects.

  6. Maybe the projects that were transferred wouldn’t have happened if their hadn’t been a govt buyer at the end.

    I agree that this is highly worthy of mention and analysis and the headline might be right at the second layer. If it wasn’t for government agreeing to buy the projects they might never have been started and GDP would have been smaller.

    One possibility is that it is transfer of completed social housing projects or mining infrastructure.

    The big question is where is the disclosure of this major component/impact on GDP.

  7. Public Private Partnership project? Who knows which one though, there has been so many on the go over the last few years.

  8. I am not sure why anyone reads the AFR or the Oz for financial reporting these days.

    By all means, they can be entertaining. But informative? You have to be kidding.

    Those who get their financial opinions from the AFR or Oz are probably doing it so they can get the addresses of companies like Storm and Acacia to put their life savings into.

  9. Alex Heyworth

    Important note in the release summary:

    “The ABS has suppressed the release of some data in the December quarter release of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0). Tables affected include tables 6, 7, 8 and 9 Expenditure on GDP. In addition data are also suppressed in the Excel spreadsheets. Tables affected include tables 2 and 3 Expenditure on GDP and tables 22 and 23. The reason for the data being suppressed is to confidentialise the sale of a second hand asset to the public sector.”

  10. Alex Heyworth

    Also worth noting:

    “A broader measure of change in national economic well-being is Real net national disposable income. This measure adjusts the volume measure of GDP for the Terms of trade effect, Real net incomes from overseas and Consumption of fixed capital (see Glossary for definitions). The graph below provides a comparison of quarterly movements in trend GDP (volume measure) and Real net national disposable income. During the December quarter, seasonally adjusted Real net national disposable income decreased -0.1%. Growth over the past 4 quarters was 0.3% compared with 3.1% for GDP.”

    No wonder people don’t think they’re getting any better off. When you adjust that measly growth for population growth, per capita we are worse off.