Josh Frydenberg spins Australia’s GDP shocker

Westpac senior economist, Andrew Hanlan, has responded to today’s GDP shocker with the below sombre (but accurate) analysis:

The economy lost considerable momentum from mid-2018, led by the turning down of the housing sector and by the consumer. These are challenging times. The Australian economy is navigating a period of cyclical weakness, centred on construction – particularly housing – after a tightening of lending standards. There are powerful structural headwinds from weak wages growth and productivity, constraining consumer spending. The global economy is slowing and downside risks have intensified as the global trade and technology war escalates, denting business confidence and business investment plans. Looking ahead, recent tax cuts and interest rate cuts will provide a boost to activity. But given the weak starting point and the powerful headwinds, the risk is that growth remains below trend over the remainder of 2019 and through 2020. Currently, growth is lopsided, with a stark divide brisk government spending in the form of public demand and weakness in private demand which fell by 0.04 on quarter and 0.4 per cent on year – the weakest result since the GFC. These results therefore further strengthen the case for a rate cut in the very near term.

But Treasurer Josh Frydenberg is having none of it:

It’s a reminder of the remarkable resilience of the Australian economy and a repudiation of all those who have sought totalk it down.
The fundamentals of the Australian economy are strong. We are having a discussion with key stakeholders about other ways we can boost investment, and those decisions will be decisions at budget time.

The fundamentals are anything but “strong”. The economy is on public sector life support. Dwelling construction is crashing. Infrastructure investment is topping out. The labour market is turning for the worse. Wages are stillborn. And commodity prices look to have peaked.

Don’t expect much, if any, improvement into 2020.

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.


    • Perception becomes reality, and perception is all too easily manipulated. And those who seek to point out the illusion are either marginalised or killed

    • Well it’s obvious this is Labor’s fault isn’t it? I mean anyone who is sound of mind as Reusa would say, can clearly see that the mere hint of a Shorten Government was enough to turn things upside down in this country.

  1. But our economy is still fundamentally sound, because our AAA credit rating is intact, thankyou for that reassurance Just Frydemburgers,

    Which is a bit like your car breaking down in the middle of nowhere, and saying it’s still fundamentally sound because your insurance Rating 1 is unaffected

  2. Will the Banks be able to make enough dodgy loans fast enough to pump it all back up before it collapses?

    • Jumping jack flash

      You don’t need to ask. It will be done. You can bet a couple of trillion new debt dollars.
      Chump change compared to how much debt we need to create to turn this thing around.

      It’ll take a mammoth effort.

      Its a shame that the population ponzi didn’t turn out the way they expected it to. It was expected that millions of new people would take on billions and trillions of new debt, but it didn’t happen that way. The millions of new people were enslaved by people who already had debt, to allow those people with existing debt to increase their total debt just a little bit more.

      The result was the debt didn’t grow fast enough and as a result of that we’re in this pickle we’re now in.

      • Don’t know about that, think about all those ‘new australians’ borrowing up to buy out at tarniet and in dog box towers. First Home Buyer demo is now new Australians. The Banks are targeting them agressively and pumping credit their way.

    • I was very concerned by today’s GDP figures but then Recessionberg said he was “having a discussion with stakeholders” so now I feel relaxed and comfortable.

        • That’s a great idea! One problem… I don’t have money for a new car. Can I buy it with I dunno, “Economic Confidence Credits” instead? Like, we’ve been hearing about “confidence” and not “talking our country down” for years. I assumed by now the RBA and Government would have made this confidence thing legal tender?

          • Jumping jack flash

            Buy it with debt.
            It doesn’t matter if you don’t have enough money. Who has 40K sitting around to buy a new car with anyway? Not many!
            1/4 of people have <$1000 in the bank.

            Debt to the rescue!

        • blacktwin997MEMBER

          Somebody sure should hold a stake firmly in Harry Triguboff’s heart, only way to be sure with that blood sucker. Followed by beheading because why take the chance?

  3. reusachtigeMEMBER

    Umm, nothing wrong with 0.5! It’s the same as last quarter and only marginally down on this time last year. Shows stability.

    Just like Labor, youse are trying so hard to talk down our economy and you are failing, as always!

    • ErmingtonPlumbingMEMBER

      Yeah labour who has only been in power for six of the last 23 years is to blame for everything!


      • Well, no sh*t, Sherlock: with the “opposition” like this, the government can get away with just about anything.

    • “They” are many and are the ones who control our destiny and chief among them are the overseas majority shareholders of our banks and they are very angry that Strayans can no longer borrow ridiculous amounts to bid up property prices.
      I imagine they are screaming into Josh’s ear right at this moment.
      Most policies do not originate in Canberra; the ‘stakeholders’ are very much in charge of this country.

    • China PlateMEMBER

      i seen steak holders at the weekend but all they talked about was how good a time it was to buy an IP

      • Jumping jack flash

        The industry I work in holds a lot of steaks.
        They’re generally far too expensive for Australians to buy though so they send pretty much all of them overseas.

    • Harry Triguboff, Frank Lowy, Richard Pratt, David Goneski…. get it….???? Joshy boy is taking instructions…

    • Poor Joshy needs a hand. He has trouble reading the IPA’s riding instructions.

      He is also still trying to work out whether Peter C, Scumo, Peter D or the Boy are his trainer.

  4. ▪️5 million third world unskilled migrants in a pop of 25 million will destroy the Gdp per Capita.

    🔹1.9 million mostly third world unskilled PR on foreign passports – they are not Australian citizens – given welfare and Medicare. Source ABS.

    🔹2.561 million TR / SCV third world unskilled migrants pretext visas – the slums of China, North & south Asia and India, Nepal, bangladesh, Cairo and Mogadishu etc transposed into Sydney & Melbourne.
    Source DHA & VisaSure.

    🔹440,000 mostly Asians and Indians on tourist / visitor long and repeat stay only here to live & work illegally
    (Source DHA parliamentary submission – 5% of the 8.8 million tourist visitors entering to live & work illegally)

    🔹65,000 Overstayers.
    Source DHA.

    => 5 MILLION NON AUSTRALIAN NON CITIZENS as internal parasites on our economy and standard of living.

    Average income including welfare?
    $43.7k (Source Treasury)

    Just over half the Australian citizen average.

    Destroying our Gdp per Capita – down 8.9% in relative terms to what it would be without this migrant influx.

    Destroying wages by some 7.8% also in relative terms – the vast foreign criminal run black and cash economy is now our largest industry and estimated at some $131 billion.
    🔻Creating Australian unemployed- 1.5 million Australians unemployed & 1.1 million Australians seeking work.
    Just our unemployment bill alone is $27 billion.

    🔻Destroying our low income housing as the Chinese & other foreign criminal syndicates laundered in over $80 billion to buy up via a migrant PR foreign passport holder (to avoid the FIRB) all the low end established residential dwellings – evict the Australians and replace them with illegal cram cash in hand bunk share for the migrants.
    Where do people think all these millions of migrant guestworkers live and how? Go out west & see for yourself. 1.1 million in just western Sydney in vast fetid migrant guestworker only slums.

    🔻116,000 Australians permanently homeless.

    🔻360,000 seeking affordable housing.
    There is your root cause of the dirty little housing bubble in Sydney & Melbourne.
    Foreign dirty money buying up Australia housing to house migrant guestworkers.

    🔻Destroying our education – as it prostituted itself as a migrant guestworker visa alibi.

    🔻Destroying our infrastructure and public services, the trains, buses, hospitals crush overload by the migraht influx.

    🔻Raising the cost of living for everyone.

    🔻Destroying our standard of living.

    ➡️ More than half (3.1 million) of the 5 million third world migrant influx are temporary or visitor migrants.

    ➡️90% or 2.8 million are in just Sydney & Melbourne.

    -> They all need to be rounded up, vetted and most of them exited.

    That’s the only way to recover our gdp, wages, services, and standard of living.

    Our borders and visa system is completely broken.

    • You’re posting this somewhere other than here right? Because we all know this stuff already. Start plonking it in the comments of Sky News and ABC Youtube channel videos.

      • Ha have you ever tried to state the obvious in migrants and our totally corrupted visa system in say ‘the conversation’ or the ‘ABC’ or ‘the guardian’ ?
        I am kind of hoping a mainstream journo or ‘demographic’ commentator is scanning MB looking for something topical & reads & copies the content.

    • Complex Carbon Unit

      You don’t have to convince me they are here,
      Parts of the outer east of Melbourne where I live is swamped with them! And don’t call me racist some are my friends but what amuses me most is how they hate each other from different provinces even from the same country lol lol lol and they call us racist lol lol, …. hang around with a rich Chinese girl from a big city and you will learn what it’s all about, some are so tough they would cut a guys balls out cook them for breakfast and say thanks lol lol lol

  5. Jumping jack flash

    That’s it, Jovial Josh… polish the turd.

    *polish, polish*

    Here, have some more debt. Its good for you.

  6. “The economy lost considerable momentum from mid-2018, led by the turning down of the housing sector ”

    It’s funny what happens in a bubble. A bubble by definition can only do one thing – pop.

    “and by the consumer”

    It’s called ‘tapped out’. The consumption dollar of 2019 was accessed in 2009-16. Debt means a forfeiture of future consumption. Debt between 2009-16 was encouraged, by way of deliberate policy settings to prevent a crash back then.

    Own it.

    It also doesn’t help with a multi-generational, systemic reduction of wage share vs profit share. Funnily enough I first spoke about it here in 2014, MB picking up on it the last 18 months. Everyone is always behind the RP trends. Anyways it now has the RBA’s focus

    So let us note:
    (P) = Profit,
    (W) = wage
    (S) = sale price
    (I) = non-labour inputs.

    Micro says: P = S – I – W…….well done little robber barons, you’re so clever.

    Simple algebra, add +W to both sides.

    Macro says P + W = S – I, on a macro scale S = chain volumes an eventuates itself as GDP, and “the return” to capital and labour is what we get out of participating in the economy..

    So in 1975, wage share was approximately 62%, profit share approximately 24%, Australian GDP in 1974 was $88.8 billion. So Labour was taking $55 billion, and capital taking $21 billion.

    In 2017, Australian GDP was $1.386 trillion –

    Wage share is 53% ($734 billion) vs Profit share 37% ($512 billion)

    So in this time of perpetual bleating of ‘business competitiveness.

    Wages: $52 billion -> $734 billion = +1234%
    Profit: $$21 billion -> $512 billion = +2306% embedding itself in the sale price

    And the “competitiveness problem” lies with wages in this country…… what adds insult to injury, the motive to reduce wage share is not calculated, not with a constructive basis, it’s not “Let’s get to 52% and we’re optimal”….. it’s just “more”… whatever today is, there is virtue in lowering it once again.

    OK, perhaps there is better, but what are we observing, let’s flip LHS and RHS.

    For a transaction to occur, S – I = P + W, i.e. for the economic activity event to occur (“S”), your customers have to come from “P” or “W”. Wage share is too low for them to be viable customers. They’ve supplemented it by increasing marginal debt over this time, but now peak debt has been reached, no more effective marginal debt can accrue.

    Now wingbat theory says trickle down will have more business activity (i.e. the customer), but it doesn’t happen. It’s like too much consumer money, they just pay too much for the same product, inflation occurs when they’ve got too much money, and we witness that too.

    I’ve always been a professed Keynesian here, I’ve come to realise what the ‘dig a hole and fill it in again’ is meant to be.

    It’s the backstop for wage share, a healthy amount of money paid to wage earners, who are your customers, to perpetuate the economy.

    The western world’s economic malaise is a result of loss of bargaining power with the owners of capital, this is the ALP’s purpose to exist. It has now forfeited even suiting up for this battle.

    I was the loudest voice in 2015 a,d 2016 singling out a Trump victory when no one else would believe it. It was TDS about ‘Ruusian influence that made me cease my subscription. How could anyone believe such a childish theory as Russian influence? I mean there’s propaganda, and BAD propaganda, how stupid do you have to be to believe in that? Too many on MB were that stupid.

    However, which I always noted, i was not a Trump fan, I could foresee why he was going to win. What I’ve described above, Trump in an inarticulate way voiced this problem.

    He will be proven to be on the right side of history, particularly against someone like Hillary Clinton. I also stated he was a moderate centrist, will the bluster of a New Yorker. It can actually turn to the right, the real right, not just to the right of Chairman Mao.

    If we get the wrong people fighting the fight about wage share and winning popular sentiment, it is not going to end well.