One of the most striking features of the Australian economy over the past few years has been the extent to which business and consumer sentiment has diverged, with businesses reporting booming conditions, whereas households have reported gloom:
Earlier this month, I contended that this divergence in sentiment was being driven by several key factors, including:
- That business profits are booming at the same time as real wages & salaries are falling;
- Household’s are drawing down their savings in order to maintain the same level of consumption; and
- Australia’s mass immigration program, along with systematic visa rorting, is boosting business conditions (think more consumers and reduced worker bargaining power), but is eroding conditions at the individual consumer level.
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