Per capita recession
A quick rip through the economy's national accounts for the June quarter in the customary 7 charts.
At the headline level, Australia's economy grew again, just (by +0.2 per cent)....but that's partly been due to high rates of population growth.
GDP per capita, on the other hand, has been going backwards for 18 months now.
Over the 2024 financial year, headline GDP was about +1 per cent higher, but GDP per capita fell by -1.5 per cent.
The difference between the two lines is accounted for by the blazing population growth rate of about 2½ per cent.
Productivity is really struggling in Australia - perhaps not surprising given the incredibly slow nature of the return to the office - and other income measures in the Aussie economy have fared relatively poorly (and will most likely continue to do so well into FY2025).
Households struggling
Alongside near-record population growth, there's been plenty of inflation around, and in current prices terms the economy expanded by nearly 4½ per cent over the financial year.
That said, most of the consumer price inflation is likely in the rear-view mirror now.
The household saving ratio - a derived figure - was estimated to be just +0.6 per cent over both the March and June 2024 quarters respectively.
These are evidently very low figures, and they conceal that many households have now completely depleted their pandemic period savings.
Indeed, after accounting for all super contributions and mortgage payments, in aggregate households are increasingly coming under a lot of pressure now.
Although the cash rate target has been steady for a while, monetary policy is still tightening the noose on households, as fixed rate mortgages continue to reset to higher interest rates.
It's little wonder household consumption is going backwards and we're facing down a retail recession.
Australia has had a decent tailwind from the terms of trade over recent times, but looking ahead it seems likely that this could become a nasty headwind over the next financial year.
Indeed, commodity prices are generally under pressure.
The price of copper has dropped by more than 20 per cent from the highs, iron ore is under significant pressure as China's property market is unwinding, and the oil price yesterday fell to under $70/barrel.
Australia's key commodity prices were down by about -7 per cent over the year to August 2024.
There aren't too many positives here, and only government spending is saving Australia from an outright recession (as it is, we only have a per capita recession).
The economy appears highly likely to need the support of lower interest rates in 2025.
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