Rates bite hard
Australia's national accounts could be well summed up in just two charts.
Firstly, the interest payable on dwellings has increased by more than 80 per cent since the pre-COVID days as interest rates have increased.
Second, the household saving ratio has plunged from the spike to 24 per cent to just 3 per cent, and will soon turn negative as more fixed rate loans reset to variable rates (after superannuation contributions we're already there for many households).
Consumer demand will almost certainly drop away accordingly, at least until such time as interest rates can fall again in 2024.
Everything else looks peaky
Australia has avoided a technical recession so far, but in per capita terms the economy contracted -0.3 per cent in the March quarter and -0.3 per cent in the June quarter.
Why is per capita GDP negative?
That's because - according to the population estimates at least - the population increased by 626,500 or +2.4 per cent over the 2023 financial year.
Cameron Kusher from REA Group with the graph:
The boom in Australia's nominal GDP as commodity prices spiked is now finally unwinding, and is set to pull down income growth over time.
And there will plenty more to come here as the terms of trade normalise.
The wrap
Overall, it's been an amazing reopening and rebound for the Aussie economy, but the honeymoon period is now over and growth in the economy has now stalled or is falling on basically every measure.
The yield curve for cash rate futures are now seen to be peaking over the next few months, and then falling in 2024.
---
James Foster dials in with the detailed analysis here.
