CBA economists Stephen Wu and Harry Ottley published a terrific chart pack on Wednesday’s Q4 national accounts, which showed that the household sector remains under pressure.
First, the overall view shows that the economy is experiencing a per capita recession, with GDP growth falling when adjusted for Australia’s strong (2.6%) population growth:
The overall economy grew by 1.5% in 2023, whereas GDP per capita fell by 1.0% over the year:
Turning to the all important household sector, overall spending grew by just 0.1% in 2023 and fell by 2.4% over the year:
The decline in spending has been concentrated on discretionary items:
The next chart breaks down where consumption has risen (energy) and fallen (cigarettes and tobacco) the most:
Again, household spending per person fell by 0.5% in Q4 and by 2.4% year-on-year:
The fall in consumption was driven by services, which fell by 1.0% in Q4:
Household debt servicing continues to rise; although the rate of growth has slowed.
Dwelling interest payable rose by 5.0% over the quarter to be 39.4% higher year-on-year:
Average debt servicing costs will continue to rise as fixed rate loans convert to variable:
One bright spot is that real household disposable income rose in Q4, the first quarterly increase since Q3 2022:
Lower inflation, lower income tax payable, and a slower increase in mortgage interest payable helped drive the result.
Commentary from the ABS noted that a “change in timing of final tax return submissions” reduced household disposable income in Q3 and improved it in Q4:
