Household spending rose by 1.1% in the September quarter, according to Tuesday’s national accounts. This meant that household consumption contributed 0.6% to the nation’s GDP growth over the quarter:
As noted by The Guardian’s Greg Jericho, “take away household spending and the economy didn’t grow at all in the September quarter, and barely at all over the past year”:
However, Marcel Thieliant of Capital Economics says factors such as rising interest rates and falling real incomes are likely to weigh heavily on future spending and will dampen the economy in 2023. She expects GDP growth to be just 1% next year.
“The decent rise in third-quarter GDP probably marks the last hurrah for Australia’s economy as tighter monetary policy and falling real incomes weigh on spending”, Thieliant said.
If true, then Australia would be plunged into a per capita recession given Australia faces record immigration flows next year and population growth nearing of 2%.
Per capita recessions in Australia are actually very common, as illustrated in the next chart:
Moreover, Australia’s real per capita GDP growth was atrocious over the past decade, tracking at around 1% growth per annum since 2014:
Extreme immigration fueled population growth has been the main driver of Australia’s GDP growth at the national level (more inputs in people means more outputs in GDP). However, everyone’s slice of the GDP pie has barely grown.
Sadly, the Albanese Government has doubled down on the same dumb growth model by ramping immigration to record levels instead of focusing on productivity-led growth.
As a result, Australians are facing another ‘lost decade’.
