The recent flow of macroeconomic data supports the view that Australian households are in recession.
The September quarter retail sales figures from the Australian Bureau of Statistics (ABS) revealed that retail sales volumes declined for the first time since the early-1990s recession, falling by 0.2% year-on-year:
Yesterday’s new car sales for November, released by the Federal Chamber of Automotive Industries, also plummeted by 9.8% in the year to November, have fallen for 20 consecutive months (in rolling annual terms), and are down 11.3% since their March 2018 peak:
Finally, household consumption growth has crashed to the lowest level in a decade (i.e. since the Global Financial Crisis) at just 1.2%, way below the historical average of 3.5%:
As noted by UBS yesterday, Australia’s private sector has fallen into recession, driven in part by the collapse in household consumption:
The underlying cause of the consumer wipe-out is the collapse in household incomes, with yesterday’s national accounts release showing that real average employee compensation is 2.2% lower than March 2012:
Put simply, Australian households are being crushed by falling real incomes alongside record household debt, and this is weighing heavily on consumption.