Mirabile dictu: Australia is officially in recession

No more ducking and weaving and balderdash:

We’re in a recession and spruikers like this bloke at AMP can eat it:

In the past few days, I visited shopping centres in North-West Sydney. Relishing my favourite burrito and treating myself to retail therapy aside, I wanted to gauge whether consumers are truly cowering at home out of caution of contracting coronavirus in public places.

Turns out, these malls and some of their stores are busier than ever. So much so that a few of my favourite food venues didn’t even have space for two even from 1 June, when restaurants and cafes can admit up to 50 patrons in NSW.

I spent hours talking to store managers and making notes about how their business has been performing and whether foot traffic is rebounding. I relay some of my conversations below, overlay some data insights and get an economist’s take on what it means for Australia’s prospects. Turns out, the odds a V-shaped recovery are increasing.

…the AMP team thinks there is a slight chance that we could eke out an increase and thereby avoid a technical recession. 

The nightmare is over. The monkey is off our backs. Australia is in an official recession.

David Llewellyn-Smith
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Comments

  1. haroldusMEMBER

    That may be the case, but Joshieboy promised me a surplus. And a surplus I shall have.

    Otherwise, it would be a world in which the word of an LNP treasurer is worthless.

    And that is a world in which I don’t want to live.

      • Saul GoodmanMEMBER

        Any stimulus in June won’t get recorded until Q3. We are officially in recession now.

  2. On Betfair, the line for the June accounts figure is minus 7.5%. I reckon it will be less than that.

  3. migtronixMEMBER

    “#BREAKING: Australia is certain to enter its first recession in 29 years after GDP contracted by 0.3 per cent in the March quarter amid bushfires and the early stages of the coronavirus pandemic”

    But we’ll see house prices rise in recession…

  4. MB readerMEMBER

    Seriously how could people have thought otherwise! But yes they did and I started to doubt it myself. We are running on BS!

    • Jumping jack flash

      Indeed, and here I was thinking the economy would be saved by the home deliveries of panic buyers.
      We should have gone full lockdown.

      • Actually many economist and politicians were hoping panic buying was going to see a positive print.
        That’s how much of a joke the economy is.

  5. Hubs is a tradie. All of his recent work has been pulling out fixtures that were leased as the office is emptied and the business is over. They may not be putting it front page of the Tele, but he sees it every single day. And quite posh places in the CBD as well. Empty and boxes stacked.

    • I went to Elwood yesterday- small uppish market shopping centre.
      Since I was last there 5 weeks ago, a block of 4 shopfronts all closed and up for lease( an Indian restaurant,2 homewares shops and I think a dentist).
      Would be half a dozen coffee shops just clinging on I would have thought.
      Brighton,Elsternwick,North Brighton- lots of for lease signs, quite a few newish developments where some of the shops have never had a tenant.
      And that’s describing a pretty affluent demographic.
      It’s looking nasty, and retail apocalypse is coming I would hav3 thought.

      • Yes. I think the terrain will look quite different end of year to mid next year. They can’t force people who are risk averse to part with their hard earned savings, and I think the banks will be very careful about debt given how their books currently look.

      • BubbleyMEMBER

        Feb 2021 will be the official start of the End of Days/Retail Apocalypse.

        No Job Keeper, no job, $500 per kid minimum to get them back in school – and the Christmas credit bill arrives.

        Also the country may, or may not, be on fire – if 2020 is anything to go by.

  6. “I spent hours talking to store managers..” – yep, so busy store managers had hours to chat with the clown.

    • happy valleyMEMBER

      Possibly, the person was from AMP’s shopping centre division and was having a long and meaningful caring and sharing chat with tenants and also, breaking the news that full rental might soon be back on the cards?

  7. What happened to the “Reject the Recession” dancers? Where’s Kochie when we need him?

  8. happy valleyMEMBER

    “Australia is in an official recession.”

    Nah – rubbish. Just a little bit of sideways movement. Just ask Reus.

  9. Steve1036MEMBER

    Lol the gronks at AMP. Retail is dead. CBD shops are empty. I’ve been to a few other westfields which are busy but it’s mostly kids running around having finally been let out of the house. Actual stores are largely empty.

    It’s hard to get a seat in some of the restaurants in my wealthy/unaffected area but that’s because they’re still restricting seating. I visited Glebe the other day where I reckon 50% of the restaurants/cafes/shops had closed down. I wonder what it’s like further out west..

    • Jumping jack flash

      “Lol the gronks at AMP. Retail is dead. CBD shops are empty. I’ve been to a few other westfields which are busy but it’s mostly kids running around having finally been let out of the house. Actual stores are largely empty.”

      It was this way before the virus. Too much debt. The virus just brought forward what was going to occur within the next 10 years.

      • I 100% agree with you Jack. You can’t carry 200% debt and keep spending while the interest, however small, continues to build up behind you. Every year of IO and every month of mortgage pause is taking from the future. There is only so long people could keep it up.

        • Jumping jack flash

          It can be kept up quite a while if the debt grows fast enough to pay the last load of interest obligation, currently around 100 billion per year.

          For that to happen, the debt has to go full exponential, and that’s very difficult to do, as banks and bankers everywhere are beginning to discover, even after systematically slashing rates to relieve the interest burden, and now QE and NIRP to get them even lower.

          It doesn’t matter. While interest rates for the people who hold the debt are greater than zero, and they must always be, as the debt approaches infinity, so too does the interest obligation, until it crushes everything.

  10. happy valleyMEMBER

    Went past one side of the highway shops in a suburb on the Sydney North Shore yesterday and noticed in the space of 50 metres, 2 restaurants (one having been there for almost 20 years) gutted.

  11. Someone in the know pointed out that Frydenberg’s sister (a medical doctor) was the one who got all the brains and empathy, and was surprised Joshie was honest about this.

    Going to be hard to spin this one, but I dare say they’ll try. Heard they also asked Morrison about the recession and he rejected the premise of the question.

  12. Jumping jack flash

    A recession while the adults are in charge?
    That’s unpossible!

    They did everything the banks told them to do!

    • Yes, banks may offer low interest rates, they may tell everyone everything is ok, media can try to stoke FOMO for housing, govt can offer grants to try to entice people to buy into a bubble….but they can’t. Force. People. To. Spend. Money (particularly their own savings, or to take on more debt).

  13. George's Rap Sheet

    You don’t need much money to survive. Everyone just has to be more resourceful and tighten their belts.

  14. BubbleyMEMBER

    “…I spent hours talking to store managers..,”

    If the store managers had enough time to talk to some random bloke, they are either not that busy or not doing their job.
    I say this as a retail store owner.

    • blacktwin997MEMBER

      Steady on, he did qualify his observations with ‘Relishing my favourite burrito and treating myself to retail therapy aside…’, surely that quantity of flowery verbiage absolves him of any responsibility for accurate reportage doesn’t it?

      Also who doesn’t have a few hours spare for some random eating a burrito and carrying a clipboard? Well apart from competent or busy retail store managers anyway.

  15. Not an official or technical recession at all. Wait until the June result.

    A technical recession is two consecutive quarters of contraction… As I’m sure MB readers know…

    • I think the next quarter results are baked in. With the shutdown and unemployment numbers they’d have to outsource the statistical manipulation to the CCP to get a positive and avoid a recession.

      It was probably a political decision to declare it now, rather than wait 3 months.

    • Just in case it wasn’t clear. the numbers that are out are for Jan – Mar… you know, when the mob was buying TP wall to wall but did have a hangover from the bushfires. Next set of numbers are Apr – Jun, after everyone got fired. If Jan – Mar are these, the Apr – Jun numbers are going to be worse… only 3 wks of June left to go so I don’t think anyone is doubting that. The only option they had was to numberwang this one to avoid a recession (technically).. And I am actually surprised they didn’t pull a >0 out of their rear end.