ANZ: Australia experiencing a ‘Claytons recession’

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.

Unconventional Economist


  1. Silver spinning:

    “But imagine how bad it would be without such high population growth? How good, therefore, is high population growth?”


    “We don’t want peoples’ house prices to go down – imagine how much they would have gone down without high population growth? How good is it?”

    I find it quite fun to put on the thinking hats of others and reason in isolation!

    Cool and normal!

  2. I’m still confused how unemployment is still fairly low, despite the massive immigration rate. It can’t all be wage theft, there would be more of an out cry from Aussies if it was.

    • There is something amiss in the employment / unemployment stats and work productivity. My sense is for some sectors less real work is being done but those people are getting paid equivalent amounts.
      I don’t think Aussies would ‘cry out’ if wage theft was occurring. MB has published a fairly long list of ‘Aussie wage theft’ over the years – most Aussies and Immigrants especially just want some reward for their work.

      • In some ways I agree with you, Aussies are really apathetic and would rather watch the Bachelor than march in the street to get a fair wage.

  3. SnappedUpSavvyMEMBER

    if this country has a slow November there is going to be a lot of small and medium sized businesses cutting staff or going to the wall next year

  4. Anecdata – man in CBD based coffee shop in Adelaide this morning was explaining to his colleagues that we are in a recession. Was it one of you guys?

  5. proofreadersMEMBER

    “This only serves the interests of few billionaires and pollies.”

    Welcome to Straya.

  6. It’s structurally worse than this damning analysis. From today’s ABS annual insights into the economy[email protected]/Latestproducts/5204.0Main%20Features22018-19?opendocument&tabname=Summary&prodno=5204.0&issue=2018-19&num=&view=

    From the smorgasbord of rotting offal it’s grim but in the long run the productivity story is said to matter most: Ok then:
    – On an hours worked basis, market sector multifactor productivity (MFP) fell 0.4% in 2018–19, the first decline since 2010-11.
    – Labour productivity fell 0.2% in 2018–19, the first recorded negative for the market sector aggregate.

  7. Those 2 graphs, real income per cap & real gdp per cap are shocking and show how Australia is falling behind. Not surprising given the LNG, toll road, housing, etc rorts, inefficient taxes, natural resources not being taxed, multinational tax avoidance etc excessive low skilled immigration, reduced budgets for TAFE, dubbing down of Uni’s etc the list of government policy failures over decades goes on & on acting like a cancer that voting Aussies don’t notices until … it’s too late.