OECD data shows that Australia has experienced the largest decline in real per capita household disposable incomes in the developed world.
The March quarter national accounts release from the Australian Bureau of Statistics (ABS) showed that annual real per capita household disposable income was tracking 8.2% below its Q2 2022 peak:
Tuesday’s Statement of Monetary Policy (SoMP) from the Reserve Bank of Australia (RBA) suggested that the recovery of real per capita household disposable income will be painfully slow.
According to the RBA SoMP’s forecast, Australia’s real per capita household disposable income will be 5.5% below its Q2 2022 ‘covid-bubble’ peak by Q4 2027.
By Q4 2027, real per capita household disposable income is forecast to be only 6.6% higher than in Q4 2011. That would represent anaemic income growth over a 16-year period.
The situation is no better for real wages, which, following Wednesday’s wage data from the ABS, were tracking 6.0% below their Q2 2020 peak at around Q4 2011 levels:
The August SoMP forecast that Australian real wages would remain 5.5% below their peak in Q4 2027, tracking just above Q4 2011 levels:
The reality is that Australian real incomes will continue to languish so long as productivity growth remains moribund. And it is difficult to see how productivity growth can rebound with the federal government intent on continuing the mass immigration growth model, committing energy policy suicide, and pump-priming housing rather than encouraging productive investment.
