Today (March 2, 2022), the Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, December 2021 – which shows that the Australian economy reversed the contraction in the September-quarter 2021 and posted an annual growth rate of 4.2 per cent. Covid lockdowns and restrictions caused the contraction and their abandonment allowed for growth to return. Growth was driven by strong growth in household consumption expenditure as public fiscal support declined and private investment expenditure went backwards. The change in the terms of trade was negative reflecting the rising import prices as supply constraints continue and demand rises. Overall, a good result but the next quarter will be much less robust (floods etc).

Today (December 1, 2021), the Australian Bureau of Statistics released the latest – Australian National Accounts: National Income, Expenditure and Product, September 2021 – which shows that the Australian economy contracted 1.9 per cent in the September-quarter. The annual growth rate of 3.9 per cent is relatively meaningless given the base was severely affected by the lockdowns last year. The decline in economic activity was driven by private demand, which contracted by 2.4 percentage points – mostly due to a decline in household final consumption expenditure. Public spending contributed 0.7 points to the GDP figure thus attenuating, to some extent, the fall in private demand. The increase in spending on health by both Federal and State governments was not large enough to avoid the contraction though. Real net national disposable income fell by 3.8 per cent, but rose by 7.8 per cent over the year. GDP per capita fell by 2 per cent in the September-quarter. There was a massive boost in the household saving ratio (from 11.8 per cent to 19.8 per cent) as a result of the tight lockdowns in Victoria and NSW during this period as a result of the renewed fiscal support. We will have to see how the rebound is next quarter now that the restrictions have been significantly eased. The most worrying thing about the data today is that the wage share in national income slumped further while the profit share in a smaller pie rose. Something needs to be done about that.

Time series data is somewhat difficult to use at present because of the dramatic impact the pandemic (and the lockdowns) has had on behaviour. It is difficult to conduct precise statistical work that spans this period and in the future, econometricians like me will have to use special techniques to isolate these observations if we are to get anything meaningful from the data over longer horizons into the future. National accounts data is also fraught at the best of times because of the lags in collection and publication. It tells us where we were three months ago and three months before that. So while today’s data release from the Australian Bureau of Statistics of the – Australian National Accounts: National Income, Expenditure and Product, June 2021 (released September 1, 2021) – shows that the Australian economy grew by 0.7 per cent in the March-quarter after growing by 1.9 per cent in the March-quarter 2021. The annual growth rate of 9.6 per cent is relatively meaningless given the base effect noted above. Household consumption growth is positive but subdued. Business investment while positive has tapered somewhat. The external sector undermined growth as exports fell sharply. The public sector contributed 0.7 points to growth, which means that without that fiscal support (at both federal and state level), there would have been zero growth. With the NSW and Victorian economies now enduring a long lockdowns the next quarter will record negative growth and there is clearly a need for increased fiscal support.

The data release from the Australian Bureau of Statistics of the – Australian National Accounts: National Income, Expenditure and Product, March 2021 (released June 2, 2021) – shows that the Australian economy grew by a healthy 1.8 per cent in the March-quarter after growing by 3.2 per cent in the December-quarter 2020. Further, the economy is now 1.1 per cent larger than it was at the outset of the pandemic in March 2020. Household consumption growth is positive but subdued. Fiscal support is declining. But business investment is now recovering and is a really positive sign. Several sectors are still struggling and renewed outbreaks of the virus in recent weeks will further create these disparities. I consider there is still need for expanded fiscal support.

Coming off a low base. That is how to view the latest data release from the Australian Bureau of Statistics of the – Australian National Accounts: National Income, Expenditure and Product, December 2020 (released March 3, 2020). It shows that the Australian economy grew by 3.1 per cent in the December-quarter after growing by 3.4 per cent in the September-quarter. But the economy is still 1.1 per cent smaller than it was this time last year. The other thing to take from the data is that it once again confirms that nations that took the virus elimination strategy have done the best in economic terms compared to those nation which resisted tight lockdowns and other restrictions and are still enduring high infection rates and stalled economies. Household Consumption expenditure rose strongly as opportunities to spend increased and disposable income recovered somewhat. How long this considerable rebound can continue is another question. With the government fiscal support due to end soon and the base now higher, the coming quarters will not be as robust. And remember that the economy is still 1.1 per cent smaller and the labour market is still struggling and the Government’s fiscal support will still be required in certain sectors, which are still unable to achieve recovery (arts, tourism).

The Australian economy officially exited recession in the September-quarter 2020, but I wouldn’t tell the labour market that. A technical recession, in case you were not aware, is defined as two, consecutive quarters of negative growth. But, given that employment always lags the start of a recovery, things remain much worse in the labour market than the GDP figures would indicate. Further, we still haven’t a clear idea of what will happen when the wage subsidy and the unemployment supplement schemes are wound back. If things are not well and truly pumping before the Government starts withdrawing the stimulus then bleak(er) times are ahead. The latest data release from the Australian Bureau of Statistics of the – Australian National Accounts: National Income, Expenditure and Product, September 2020 (released December 2, 2020) – shows that the Australian economy grew by 3.3 per cent in the September-quarter after contracting by 7 per cent in the previous quarter as a result of the extensive lockdowns. Household Consumption expenditure rose strongly as opportunities to spend increased and disposable income recovered somewhat. The wage share fell to record levels though (49 per cent) as the real wage growth was outpaced by productivity growth. Overall, I expect the next quarter (December) to be stronger given the recovery that Victoria will bring after opening its economy back up again.