While perusing Twitter (X) on Thursday, I came across the below chart showing that Australia has recorded the biggest decline in real household spending per capita since the Great Depression:
In order to test this thesis, I have compared the per capita decline in Australia’s economy against prior downturns (excluding the pandemic lockdowns).
The first point of comparison is Australia’s real per capita GDP:
From Q2 2022 to Q1 2024, Australia’s per capita GDP has declined by only 1.6%. While it would have fallen further in Q2, this decline is modest compared to the 5.0% decline recorded in the 1970s recession and the 3.0% decline recorded in the early-1990s recession.
That is where the good news ends, however.
The following chart plots the declines in Australia’s real per capita household disposable income:
As you can see, the current 7.6% decline from the Q2 2022 peak is unprecedented and dwarfs anything that has come before it during our lifetimes.
Indeed, the current decline in Australia’s real per capita household disposable income is also an outlier compared to peer nations:
In terms of household incomes and consumption, the current recession is Australia’s worst in modern history.
