Spending plunges
You can always argue the toss on the technical definition of recession, but we might be just about there according to today's figures.
A quick look through today's data releases reveals a little texture.
We've been through a corporate profits boom over the past few years, mainly due to the enormous spike in key commodity prices around the world, but this is now finally unwinding.
Sure enough, gross corporate profits declined -13 per cent in the June quarter, driven by a -21 per cent declining in gross mining profits.
This shouldn't be too unexpected, of course, given the scale of the preceding boom.
Wages and salaries paid increased by a solid +1.8 per cent in Q2, but it looks like the pulse is now gone here too, having peaked in September 2022.
Sales were soft, down by a modest -0.3 per cent, while inventories came in at a very weak -1.9 per cent.
That means that after a surge last quarter, inventories could subtract a full percentage point from GDP growth this quarter.
It's quiet possible therefore that Q2 GDP growth will come in flat or negative when reported on Wednesday this week.
James Foster ploughs through the details for you here.
Household spending tanks
Separately the ABS release its household spending indicator for July, which slowed further.
After inflation there's likely to be a nasty drop in consumption recorded for this quarter.
Source: Fabo, Macquarie Bank
As Fabo points out, spending on goods is already deeply into negative territory.
The Melbourne Institute inflation gauge increased +0.2 per cent over the past month, and fuel prices have jumped higher again, giving rise to some concerns about sticky inflation.
Realistically though there's still heaps of tightening to come as fixed rate mortgages reset to variable rates over the next few months, and the economy is already right on the brink of a technical recession, if not already there.
