ANZ chief Shayne Elliott has said that while the Australian economy has avoided a technical recession, it sure does feel like one to many of its customers:
“Does it feel like a recession? It does to a lot of people,” Mr Elliott said on Wednesday. Despite record-low official interest rates, he said ANZ’s data showed savings from the latest round of official rate cuts were used to reduce housing debt, at the expense of consumer spending on cars, restaurants and at retail outlets…
While Mr Elliott considered it unlikely that Australia would enter an official recession, he told the Arnold Bloch Leibler event that “many households feel they have less discretionary income” and economic growth is “below its potential”.
Furthermore, the Reserve Bank’s official rate cut earlier this month had a limited short-term impact because “unfortunately, the relief from low interest rates is starting to be poured back into housing. [Consumers] are not spending it on retail or other things”.
As we have noted previously, it is extremely difficult for Australia to record a technical recession when the population is growing at 1.6% people a year, on the back of mass immigration.
However, Australian households have experienced a seven year recession in real per capita household disposable income (HDI), which has fallen by 0.5% over the past seven years:
Moreover, Australia’s real per capita HDI growth was the lowest among OECD nations over the five years to 2019:
The past financial year has been brutal, with per capita GDP growth of 0%, -0.1%, 0% and 0% recorded over the past four quarters, giving the below annual growth chart:
As you can see, the Australian economy has just experienced its second annual fall in real per capita GDP, which follows the deeper falls experienced during the Global Financial Crisis.
To make matters worse, Australia’s real per capita GDP growth has underperformed all major economies and regions this decade, as illustrated below using OECD data:
The gap underperformance has also worsened materially over the Coalition’s term in government:
So while the Australian economy has avoided a technical recession, the per capita economy is sick. Household incomes are going backwards, and per capita GDP is in recession. It is only Australia’s extreme population growth that is keeping Australia from a ‘technical recession’. And this is coming at the expense of productivity, amenity, housing affordability, and wage growth.
What good is life without recessions if it comes at the price of getting worse in slow motion? This only serves the interests of few billionaires and pollies.
And it is ALL about population growth.