'A year of two halves, Brian...'
Growth slowed to 0.2 per cent in the fourth quarter, as expected, pumping the headlines of a 'per capita recession' and predictably gleeful responses from Shadow Treasurer Bowen and others.
Yep, funnily enough a Royal Commission into pretty much the entire financial system will do that!
It has now been 110 quarters since Australia had an actual recession (and, in any event, nobody knows how many 'capitas' there were, with the population figures lagging so much).
Thus the first half of the year saw growth pumping along at around a 4 per cent annualised pace, but by H2 2018 that rate of growth had dwindled to about only 1 per cent.
Thus the first half of the year saw growth pumping along at around a 4 per cent annualised pace, but by H2 2018 that rate of growth had dwindled to about only 1 per cent.
Notably dwelling construction is now subtracting from growth, and will continue to do so through 2019, though an upbeat Reserve Bank still expects to see the economy growing by about 3 per cent this year.
And in turn nominal GDP growth was much improved at 5½ per cent, with more to come here in early 2019.
Dovetailing
So while GDP growth slowed to 2.34 per cent in 2018, national income was actually quite strong, and real net national disposable income surged 3.73 per cent higher.
Lenders delivered plenty of tightening on interest-only mortgage rates, yet remarkably total interest payable on dwellings remains lower than a decade earlier, despite the enormous growth in the Aussie population and number of dwellings over that time.
And, finally, the household saving ratio ticked just a notch higher to 2½ per cent.
The wrap (cutzerates)
Short and sweet today.
Overall it was quite a nasty second half of 2018 as credit flows dried up, even as nominal growth in the economy saw a revival.
Fear not, because the interest rate cut forecasters are now out in force: Westpac, AMP, Nomura, UBS, JP Morgan, Market Economics, KPMG...and probably some others I haven't thought of.
JP Morgan now expects to see 25bps cuts by August 2019.
