In the June-quarter, it was only the contribution of public spending that allowed the Australian economy to avoid negative growth. That contribution disappeared in the September-quarter and given the fiscal settings and the negative investment contributions it was obvious that Australia would slide closer to recession – recording negative growth for the first time since the September-quarter 2011. The fact is that the non-mining part of the economy is already in recession and has been for some time. Today, the Australian Bureau of Statistics released the – September-quarter 2016 National Accounts data – which showed that real GDP had indeed slumped to record a negative 0.5 per cent outcome. Annual growth (last four quarters) has fallen to 1.8 per cent, but the September-quarter outcome is closer to where we are now rather than what happened towards the end of last year and earlier this year. The Australian economy has been marching inexorably towards recession for the best part of this year and government refuses to budge from its attempts to impose fiscal austerity. Madness is a euphemism for their policy conduct. Incompetent also comes to mind. the September-quarter result has been driven by a negative contribution from private capital formation, net exports and now public spending. The only on-going positive contribution to growth came from household spending. My experimental research (which I will blog about when I am more certain of the methodology) show that when we take out the mining sector, Australia has been in recession or near it for some quarters and only the government contribution has made the difference between the two states. The on-going negative growth in private investment means that potential output in Australia and future growth rates will be lower than otherwise. Not a positive sign. The data continues to confirm that Australia faces a very uncertain outlook and with the Federal government intent on imposing austerity, then the nation is probably already recession overall (given the National Accounts data is already three months old). That should be a huge wake up call for the Federal government which is currently trying to bully the Senate into accepting massive cuts in public expenditure.

Last we we learned that investment in Australia has plunged in the June-quarter. Yesterday, we learned that the external deficit has risen and the contraction in net domestic spending would reduce real GDP growth by 0.2 percentage points. Today, the Australian Bureau of Statistics released the – June-quarter 2016 National Accounts data – which showed that real GDP has slowed significantly in the most recent quarter, growing by only 0.5 per cent (down from 1 per cent in the three months to March 2016). The March-quarter result is now looking like an aberration. Without that public spending contribution to growth, which was dominant in the June-quarter, Australia have recorded negative growth in that quarter. The contribution from non-government spending netted out to minus 0.5 percentage points with negative contributions from the external sector and private capital formation and a declining contribution from private households. The on-going negative growth in private investment means that potential output in Australia and future growth rates will be lower than otherwise. Not a positive sign. The data continues to confirm that Australia faces a very uncertain outlook and if public spending is cut in the current quarter then the nation is heading for recession. That should be a huge wake up call for the Federal government which is currently trying to bully the Senate into accepting a $A6 billion cut in federal public expenditure.

Today, the Australian Bureau of Statistics released the – March-quarter 2016 National Accounts data – which showed that real GDP grew strongly by 1.1 per cent in the three months to March 2016 (up from 0.6 per cent in the December-quarter 2015). It was largely driven by strong exports growth (and declining imports growth). In addition, private household consumption maintained a (declining) contribution as did public consumption. The negative growth in private investment means that potential output in Australia and future growth rates will be lower than otherwise. Not a positive sign. The other notable result was the increasing evidence that Australia continues to be in an income recession. Real net national disposable income fell by 1.3 per cent over the last year (to March) although the recent negative quarterly trend was arrested in the latest figures. The data continues to confirm that Australia faces a very uncertain outlook and the dependence on the volatile exports suggests a roller coaster ride ahead.

Today, the Australian Bureau of Statistics released the – December-quarter 2015 National Accounts data – which showed that real GDP grew by 0.6 per cent in the three months to December 2015 (down from 1.1 per cent in the September-quarter. It was largely driven by Private household consumption (albeit declining) and public consumption and capital formation. Private consumption growth remained positive and contributed to growth, but it is being funded by a declining saving ratio and rising indebtedness. This was in the context of declining real wages growth and declining real net national disposable income overall and per capita. These trends are unsustainable. The government sector was responsible for 50 per cent of the total growth in the December-quarter. Without the public sector spending contribution, annualised growth would be at 1.2 per cent relative to pre-GFC trend rates of between 3 and 3.25 per cent. The negative growth in private investment means that potential output in Australia and future growth rates will be lower than otherwise. Again, not a positive sign. The other notable result was the increasing evidence that Australia continues to be in an income recession. Real net national disposable income fell by a further 0.1 per cent over the quarter and 1.1 per cent over the last year. The data continues to confirm that Australia faces a very uncertain outlook and with the annual fiscal statement coming up – now is not the time to be cutting net public spending.

Today, the Australian Bureau of Statistics released the – September-quarter 2015 National Accounts data – which showed that real GDP grew by 0.9 per cent in the three months to September 2015, largely because there was a strong rebound in export volumes. Domestic demand contracted because both private and public investment spending was sharply negative. The other notable result was that ‘income recession’ that Australia entered in the last quarter has consolidated wth the total market value of goods and services (GDP) outpacing the flow that Australian residents enjoy as income. Real net national disposable income fell by a further 0.1 per cent over the quarter and 1.0 per cent over the last year. While private consumption growth remained positive, the savings ratio fell indicating that households are drawing on savings or credit to fund their on-going spending in the fact of weak wages growth and declining Real net national disposable income overall and per capita. Today’s data is positive in the sense that growth has not collapsed given the poor investment spending performance. But the reliance on net exports (with export growth and import contraction) provides a very uncertain outlook.

The Australian Bureau of Statistics (ABS) published the September-quarter – Private New Capital Expenditure and Expected Expenditure, Australia – data today as part of the sequence of data releases relating to next Wednesday’s release of the third quarter National Accounts. Today’s release is especially important given the earlier signs that expected investment would plummet in 2016 and drive economic growth towards recession. Today’s release confirms the worst with Total new capital expenditure falling by 20 per cent in the 12 months to September 2015, investment in Building and structures falling by 23.6 per cent over the same period, and investment in Equipment, plant and machinery falling by 12.7 per cent. In the September-quarter alone, Total new capital expenditure fell by 9.2 per cent. Expected investment for 2015-16 is now 20.9 per cent lower than the equivalent figure 12 months. This is a disaster for the Australian government’s fiscal strategy outlined earlier in May, which was planning to accelerate the austerity. The fiscal stands is currently based on deeply flawed forecasts of private spending and if the investment plans signalled in this data release are realised then the economy will continue to move towards recession over the next 12 months. In light of the latest investment expectations revealed in today’s ABS data release, the Government should abandon their fiscal strategy immediately and announce a significant stimulus package. Unemployment is already at elevated levels and will rise further under the current trends. This is another case of neo-liberal austerity white-anting the capacity of the economy to deliver prosperity for all.

When the March-quarter 2015 National Accounts came out three months ago I wrote that “the fragility of growth increases”, as the economy descended into a state of weak growth well below the accepted trend rate. The latest data – June-quarter 2015 National Accounts data – released by the Australian Bureau of Statistics today suggests that that fragility has worsened as net exports contracted sharply. Only household consumption and government spending (both consumption and investment) kept the Australian ecoomy growing, albeit at an aneamic rate of 0.2 per cent for the quarter and 2 per cent for the year to June 2015. But the trend is towards near zero growth and the ABS wrote that “Nominal GDP growth was 1.8% for the 2014-15 financial year”, which was “the weakest growth in nominal GDP since 1961-62.” The other notable result was that ‘income recession’ that Australia entered in the last quarter has consolidated wth the total market value of goods and services (GDP) outpacing the flow that Australian residents enjoy as income. Real net national disposable income fell by a further 0.9 per cent over the quarter and 1.1 per cent over the last year. While private consumption growth remained positive, the savings ratio continues to fall indicating indebtedness in on the increase as wages growth remains weak. The other notable result is that despite the call for austerity by the Federal government, gross fixed capital formation (investment) rose by only 0.4 per cen, driven entirely by public sector investment spending. Without the contribution of public spending overall, the Australian economy would have been in negative growth territory. Today’s data paints a very negative outlook for the Australian economy for the remainder of this year and into 2016. With real GDP growth well below that needed to reduce unemployment and underemployment, the government needs to stimulate the economy to boost income and employment growth. This would also allow wages to grow and take the squeeze off households.

The – March-quarter 2015 National Accounts data – released by the Australian Bureau of Statistics today confirms that the Australian economy was stuck in a weak growth state in the last three months of 2014. Real GDP growth grew by by a 0.9 per cent in the March-quarter 2015. The annual growth rate of 2.3 per cent down from 2.5 per cent in the December-quarter, and still well below trend. But the March-quarter result is stronger than the last 3 quarters. One should not be optimistic about the future though. Australia is now firmly caught up in what we call an ‘income recession’ where the total market value of goods and services (GDP) is outpacing the flow that Australian residents enjoy as income. Real net national disposable income fell by 0.2 per cent over the last year. While private consumption growth remained positive, it is not being driven by wages growth (which have fallen overall in the last year). Rather, the savings ratio fell and indebtedness in on the increase – signs of trends that ultimately led to the GFC> Further, despite corporate profits rising, private investment growth was negative. With the fiscal position now leaning towards austerity, today’s data paints a fairly uncertain picture for the Australian economy for the remainder of this year. Now is not the time for fiscal retrenchment. With real GDP growth well below that needed to reduce unemployment and underemployment, the government needs to stimulate the economy to boost income and employment growth. This would also allow wages to grow and take the squeeze off households.