Posts in this category focus on National Accounts data publications

Prosperity of Australian households going south, while Keir Starmer praises Margaret Thatcher

I am covering a few topics today, given that I used yesterday’s post space to analyse the national accounts release. There is a further point I wish to make about the latest national accounts data. A focus on real household disposable income shows the full extent of the impacts of monetary policy (rate hikes) and fiscal policy (tax bracket creep) on household prosperity. The Australian government is overseeing one of the largest falls in household prosperity in recent history aided and abetted by the RBA. And the only thing the Treasurer has announced this week is his intention to alter the RBA Act to rescind his power to change monetary policy if it acts against the national interest. Meanwhile, the British Labour Party leader was out there praising Margaret Thatcher and equating her shock therapy to his own purges within the Labour Party of anything that resembles a progressive voice. After all that, I have some spiritual jazz for our listening pleasure.

Read more

Australian national accounts – growth falls to 0.2 per cent in September – and only because of fiscal support measures

Today (December 6, 2023), the Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, September 2023 – which shows that the Australian economy grew by just 0.2 per cent in the September-quarter 2023 and by 2.1 per cent over the 12 months. If we extend the September result out over the year then GDP will grow by 0.8 per cent, well below the rate required to keep unemployment from rising. GDP per capita fell by 0.5 per cent and Real net national disposable income fell by 0.6 per cent – a measure of how far material living standards declined. Households cut back further on consumption expenditure growth while at the same time saving less relative to their disposable income in the face of rising interest rates and temporary inflationary pressures. Temporary fiscal policy measures (to ease cost-of-living pressures) were the difference between poor growth and no growth at all.

Read more

US national accounts data – no sign that interest rates are working the way economists think they work

On October 26, 2023, the US Bureau of Economic Analysis published the latest US National Accounts figures – Gross Domestic Product, Third Quarter 2023 (Advance Estimate) – which showed that “Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023”. The June-quarter 2023 growth rate was 2.1 per cent. There was broad-based growth in all the expenditure components, including those that would be most sensitive to interest rate rises. My prior, of course, is that the interest rates would not significantly reduce growth in the short run, whereas mainstream New Keynesian theory considers interest rate rises to be an effective tool in moderating total spending, and, in turn, reducing inflation. The reality does not support the mainstream proposition. Consecutive national accounts releases from the US, however, have shown that aggregate expenditure is resilient in the face of the interest rate increases.

Read more

Australia national accounts – growth continues to be sluggish as material living standards decline

Today (September 6, 2023), the Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, June 2023 – which shows that the Australian economy grew by just 0.4 per cent in the June-quarter 2023 and by 2.1 per cent over the 12 months. If we extend the June result out over the year then GDP will grow by 0.8 per cent, well below the rate required to keep unemployment from rising. GDP per capita fell by 0.3 per cent and Real net national disposable income fell by 1.4 per cent – a measure of how far material living standards declined. Households cut back further on consumption expenditure while at the same time saving less relative to their disposable income in an effort to maintain consumption growth in the face of rising interest rates and temporary inflationary pressures. The result also shows that the RBA’s attempts to engineer a recession are so far failing which tells us about the ineffectiveness of monetary policy.

Read more

The Ireland growth miracle is largely illusory and biasing Eurozone growth data upwards

I have been avoiding keeping up-to-date with the Irish national accounts over the last several years for reasons that I documented in this blog post – Ireland – not as rosy as the official story might suggest (January 2, 2018). Ireland has been held out as the poster nation for the Eurozone boosters because of its seemingly ‘impressive’ growth performance after entry into the common currency and its resilience after the Global Financial Crisis. During the GFC, I wrote a series of blog posts (see below) that delved into reality of the Irish situation and we learned that the so-called ‘Celtic Tiger’ growth miracle was an illusion and was driven by major US corporations evading US tax liabilities by exploiting massive tax breaks supplied to them by the Irish government. Since then the ‘smoke and mirrors’ have become even more obvious as the Irish national accounts recorded massive increases in business investment all due to fudges in the way several large corporations recorded their tax affairs. I decided recently to see where this was at given the European Commission is still claiming that growth. What I found was that the distortions in the Irish data are influencing the outcomes reported for the European Union as a whole and things are definitely not as robust as the official figures demonstrate.

Read more

US spending data not demonstrating effectiveness of monetary policy

I have been looking for signs that the concerted efforts by most central banks (bar the eminently more sensible Bank of Japan) to kill growth and force unemployment up have actually been effective. My prior, of course, is that the interest rates will not significantly reduce growth in the short run, but may if they go high enough start to impact on spending patterns of low income households. The next data that will help us associate the interest rate effects on spending by income quintile in the US comes out in September 2023, so I will watch out for that. The most recent national accounts data from the US, however, does not support the mainstream belief that monetary policy is the most effective tool for suppressing expenditure. Far from it.

Read more

Australia national accounts – economic growth slumps to below 1 per cent annualised – unemployment on the rise

The Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, March 2023 – today (March 1, 2023), which shows that the Australian economy grew by just 0.2 per cent in the March-quarter 2023 and by 2.3 per cent over the 12 months. If we extend the March result out over the year then GDP will grow by 0.8 per cent, well below the rate required to keep unemployment from rising. Working hours dropped in the March-quarter and I expect that trend to accelerate in the coming quarters given the conduct of the central bank and treasury. The March-quarter result represents a significant decline in growth, Households cut back further on consumption expenditure while at the same time saving less relative to their disposable income in an effort to maintain consumption growth in the face of rising interest rates and temporary inflationary pressures. I expect growth to decline further and we will be left with rising unemployment and declining household wealth as a result of the RBA’s poor judgement.

Read more

Australian National Accounts – GDP growth in decline, expect unemployment to rise – courtesy RBA sabotage

The Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, December 2022 – today (March 1, 2023), which shows that the Australian economy grew by 0.5 per cent in the December-quarter 2022 and by 2.7 per cent over the 12 months. This is a significant decline in growth, which is now insufficient to prevent unemployment from rising over the coming period. Growth is being driven largely by continued (but moderating) growth in household spending. This was augmented by the strong rebound in the Terms of Trade (commodity prices), which helped net exports make a positive growth contribution. There was growth in employee compensation (the wage measure from the national accounts) of 3.2 per cent but that was largely due to administrative decisions (for example, minimum wage increases) that impacted in this quarter rather than being the result of market pressures. Households are now saving less relative to their disposable income in an effort to maintain consumption growth in the face of rising interest rates and temporary inflationary pressures. I expect growth to decline further and we will be left with rising unemployment and declining household wealth as a result of the RBA’s poor judgement.

Read more

Australia National Accounts – growth continues at a moderating pace

The Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, September 2022 – today (December 7, 2022), which shows that the Australian economy grew by 0.6 per cent in the September-quarter 2022 and by 5.9 per cent over the 12 months to the end of September 2022. Growth is being driven largely by continued growth in household spending (which has not yet succumbed to the cost of living squeeze exacerbated by the interest rate rises). There was a modest contribution from private capital formation. The terms of trade declined sharply signalling a negative contribution from net exports and declining real net national living standards. There was growth in employee compensation (the wage measure from the national accounts) of 3.2 per cent but that was largely due to administrative decisions (for example, minimum wage increases) that impacted in this quarter rather than being the result of market pressures.

Read more

Australian national accounts – wage share at record low while corporate profits boom – this is not right!

The Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, June 2022 – today (September 7, 2022), which shows that the Australian economy grew by 0.9 per cent in the June-quarter 2022 and by 3.3 per cent over the 12 months to the end of June 2022. Growth is being driven by a combination of household spending (which has not yet succumbed to the cost of living squeeze exacerbated by the ridiculous interest rate rises) and a booming export sector (on the back of strong terms of trade). The problem is that while the on-going productivity growth has provided scope for non-inflationary real wage rises, real wages are going backwards. The problem is that business are pocketing these productivity gains as profits. The wage share fell further to a record low of 48.5 per cent which is a shocking testimony of the way the wages system is penalising workers. That needs to stop and the government should do something about it.

Read more
Back To Top