Per capita recession for Australia
Perhaps it's no surprise that the massive hikes in interest rates are now belting households, with the saving ratio down to just 1.1 per cent in the September quarter, and set to turn negative by the time this year is out.
GDP growth came in at just +0.2 per cent for the September quarte, or -0.3 per cent in per capita terms.
If it hadn't been for the FIFA Women's World Cup - and the Matildas exhilarating run pumping up travel exports by +4.4 per cent - the headline GDP figures would've been close to negative as well.
In fact GDP per person has been falling throughout 2023, so the per capita recession is now well and truly entrenched, with growth is set to slump below trend in 2024 under the current settings.
The terms of trade boom is now also unwinding, with lower coal, oil, and natural gas prices all set to play a role in pulling income lower in 2024.
Critically mortgage interest payable by households has exploded by an outlandish +173 per cent since the March 2022 lows.
I doubt this will prove to be sustainable for the current levels of household consumption.
Australian commentary is still intensely focused on the need to defeat inflation, but across most of the rest of the developed world the narrative has moved on to how much interest rates will need to fall by next year to stave off a recession.
As global demand plunged oil prices have crashed to $69/barrel overnight, falling below $70 for the first time since July, and down by -27 per cent from the highs.
Natural gas prices were also down by -5 per cent.
I wonder if oil is shaping up to be an outstanding 'Buy' again sometime soon.
I reckon we'll soon discover we're fighting yesterday's war on the inflation front, and market pricing has certainly shifted that way with OIS pricing now sloping markedly lower over the next 18 months, and looking set to drop below 4 per cent by the end of 2024.
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