Well now we know. Australia’s annual GDP growth rate fell to its lowest level since December 1991, outside of the pandemic as consumers hunkered down in the face of elevated borrowing costs and stubbornly sticky inflation.
Annual GDP growth has slowed markedly from a decade average of 2.4%, partly due to the RBA’s rate tightening campaign through 2022-23 to rein in inflation. The cash rate is currently at a 12-year high of 4.35% and policymakers have signaled they’re in no rush to cut any time soon.
Australia’s Q2 GDP was worse than economists expected, growing by only 0.2% over the quarter to be up only 1.0% year-on-year. The result missed analysts’ expectations of a 0.3% quarterly rise.
With Australia’s population still growing aggressively through net overseas migration, population increased by 0.6% in Q2, meaning that per capita GDP declined by another 0.4%. In fact, Australia’s per capita GDP has now declined for six consecutive quarters and seven of the past eight quarters, to be down 2.0% from its peak.
As you will know if you have been following my surveys, the household sector is especially hurting as higher household earnings were partly offset by an increase in income tax payable and mortgage payments and so despite the population surge, Household spending actually fell 0.2% in the second quarter, detracting 0.1 percentage point from GDP growth. Discretionary consumption was hit particularly hard. This puts a number on the political pain of falling living standards from the inflationary cost-of-living squeeze, made worse for mortgage borrowers by the RBA’s higher interest rates.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Well now we know. Australia’s annual GDP growth rate fell to its lowest level since December 1991, outside of the pandemic as consumers hunkered down in the face of elevated borrowing costs and stubbornly sticky inflation.
Annual GDP growth has slowed markedly from a decade average of 2.4%, partly due to the RBA’s rate tightening campaign through 2022-23 to rein in inflation. The cash rate is currently at a 12-year high of 4.35% and policymakers have signaled they’re in no rush to cut any time soon.
Australia’s Q2 GDP was worse than economists expected, growing by only 0.2% over the quarter to be up only 1.0% year-on-year. The result missed analysts’ expectations of a 0.3% quarterly rise.
With Australia’s population still growing aggressively through net overseas migration, population increased by 0.6% in Q2, meaning that per capita GDP declined by another 0.4%. In fact, Australia’s per capita GDP has now declined for six consecutive quarters and seven of the past eight quarters, to be down 2.0% from its peak.
As you will know if you have been following my surveys, the household sector is especially hurting as higher household earnings were partly offset by an increase in income tax payable and mortgage payments and so despite the population surge, Household spending actually fell 0.2% in the second quarter, detracting 0.1 percentage point from GDP growth. Discretionary consumption was hit particularly hard. This puts a number on the political pain of falling living standards from the inflationary cost-of-living squeeze, made worse for mortgage borrowers by the RBA’s higher interest rates.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
In this weeks show we highlight the link between Government policy and home prices (rather than the economic theory of supply and demand), touch on the risks of renovations, as costs spiral and look at the latest listing and price trends as we move in the spring selling season.
Edwin Almedia, our property insider says, Melbourne is a bellwether. We will see.
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Today’s post is brought to you by Ribbon Property Consultants.
Markets have reduced their expectation of a cash rate cut this year following key data at home and in the US suggests both economies were still on solid footing despite elevated inflation and decade-high borrowing costs. Now Australian money markets are no longer fully pricing in an interest rate cut this year, implying an 85 per cent probability of an easing, against 118 per cent on Tuesday.
Actually, in Australia, money markets are pricing in two to three rate cuts by early April and this dialling back came after the monthly consumer price index indicator for July, released on Wednesday, beat analysts’ forecasts by rising to 3.5 per cent, against 3.4 per cent expected. The outcome added to the case for the cash rate to stay on hold in coming months.
Then on Friday, data showed retail sales in July were unchanged, following a 0.5 per cent lift in June. While the reading missed forecasts of a gain of 0.3 per cent, it also came after two months of strong gains, potentially in anticipation of tax cuts which kicked off on July 1.
Overall, it seems we are caught in this higher for longer rate cycle much longer than many expected, and the expectation of cuts in the next few months are unlikely to eventuate, black swan event excepted. The likely inflation pulse from too much Government spending and badly targeted “support” suggests our inflation battle is far from being over, even as growth will come in weak on 4th September when the National Accounts are released to June 2024.
For households and businesses on the sharp end of all this, its bad news, but is should also question those in positions of power, as Governments, Central Bankers and perhaps even markets have lost the plot.
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I caught up with Queensland Senator Gerard Rennick, who this past week announced a switch to become an independent, with a view to Putting People First”.
In this show we discuss the state of politics, policies which could make a real difference to people, and the need to right-size the political machine.
A must watch!
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Go to the Walk The World Universe at https://walktheworld.com.au/
In this weeks show with our Property Insider Edwin Almeida, we look at the latest data and reports on the property market. How far is the lag and what can we tell about what is happening on the ground?
The vibes are showing higher listings, but not necessarily good quality ones and the rest, while politics seems to be warping things even more.
The pressure on households is real, but some polys are still building their investment property portfolios. Conflict? What conflict?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
I caught up with author Bruce Francis Schaafsma who has just published a thought provoking book which questions some fundamental assumptions about economics, with profound and far-reaching consequences. While we see the rich getting richer whilst others struggle, what if there are enough resources in the world, and the real issue we face is a distributional one, and not scarcity related – despite what modern economists would have you believe?
In this show we look at the technocrats at the Bank for International Settlements, how they came to hold so much power, and what that means for us today. Timely, given the Jackson Hole bankers “love-in” happening this week.
This builds on my earlier show “Who Killed The Australian Dream?” recorded with Elisa Barwick from the Australian Citizens Party, see the link here. https://youtu.be/9YbCc9NxBfs
In tonight’s show our Property Insider Edwin Almeida and I chuckle at the “innovative” policy for first home buyers being mooted in the USA (no, these do not work: see Australia!), look at price growth in Perth, and a horror story in Logan City, Brisbane, as well as the normal deep dive in the numbers. And at the end a really useful tip, as usual!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
On Friday, RBA Governor Michele Bullock and her new look team were questioned by the House Economics Committee in Canberra for most of the morning. And I watched it all, so you don’t have to! There was very little new at one level, because the bank had recently released its statement on monetary policy and rate `decision.
Recall that the Reserve Bank left the key rate at a 12-year high of 4.35% and maintained its hawkish rhetoric. Money markets and economists still reckon the RBA’s next move will be a cut, though they’re split on the timing. Traders are betting December will be the beginning of the easing cycle, while the consensus of economists is it will only start sometime in 2025.
It’s clear from Governor Bullocks opening statement, that Australia’s central bank remains some way off easing monetary policy because inflation is proving persistent and will only return back to the target range late next year. “The board remains vigilant to upside risks to inflation,” Bullock said in her opening statement to a parliamentary panel in Canberra on Friday. “It is premature to be thinking about rate cuts.”
Supporting the RBA’s caution, data this week showed Australia’s labor market continued to add jobs at a solid pace while wage growth remains elevated. See my earlier show “When things don’t add up at the RBA. Separate figures pointed to a small rebound in consumer sentiment and business confidence is holding up.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
