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I was interviewed via email earlier this week by Harrison Christian, a senior reporter at News.com.au, asking why the US economy is performing so much better than Australia’s. In particular:
- US real GDP growth is 4.4%, compared with Australia’s 2.1%.
- US CPI inflation is 2.4% compared with Australia’s 3.8%.
- The US is still cutting interest rates, while Australia is hiking.
- The only metric where Australia is ahead is unemployment. Ours was 4.1% in December versus 4.3% in the USA.
My explanation for why the US economy is outperforming Australia’s comes down to productivity.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.