Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Wednesday, 28 September 2016

Living standards have...increased

Goldilocks, permabears

Everything is never 'just right' - a fact of life!

A lot of people have gripes with neoliberalism. So be it.

Nonetheless, GDP growth in Australia surged by an above trend +3.3 per cent in the year to June 2016.

Even in per capita terms - adjusting for population growth - GDP was up by a very solid +2.0 per cent. 

In other words, despite a global financial crisis, GDP per capita is at a record high. Never been this high before!

Living standards and real wages are at their highest ever level. 

Of course, GDP isn't the perfect measure of living standards (wait until the next time it's falling again, though, and let's see if it's a discredited measure then...).

With GDP growth so strong, people have been at pains to point out weak income growth.

For the record national income and real disposable income also rebounded last quarter to new highs.

For balance people might also note that real net disposable income per capita growth soared by an incredible average of +3.1 per cent per annum over a 17-year period before stagnating from around 2008.

So in fact we have become much better off as a nation over any meaningful period of time. 

Some of this boom was productivity driven, and some by favourable demographic shifts which increased the share of population in work. 

And of course, the improved terms of trade helped a lot too. Alas, commodity prices can’t go up for ever!

Household wealth is tracking at around record highs too, as the ABS will confirm tomorrow, in part because capital city property prices are also at a record high on a weighted average basis. 

Overall, a pretty good effort through a global financial crisis.