In real per capita net national income terms, Australia has been in recession for the first nine months of 2012.
The latest real GDP figures don't tell the full story. The Bureau of Statistics (ABS) adjusts real GDP for changes in our terms of trade that affect our purchasing power. This adjustment produces estimates of real gross domestic income (GDI)
In trend terms, GDI increased by just 0.1% in the September quarter, the same as the estimate for the June quarter, and after zero growth in the March quarter. The increase in the year to the September quarter was only 0.7%. The corresponding real GDP increases were 0.6%, 0.7%, 0.9% and 3.4%, respectively. The difference reflects falls in the terms of trade by 1.4%, 3.4%, 5.4%, and 12.7%, respectively. In the last year, GDI growth was one-fifth of GDP growth.
Real net national disposable income is a broader measure of changes in Australia's real income. This measure adjusts the ABS real GDP estimate for changes in our terms of trade, real net incomes from overseas, and consumption of fixed capital (physical depreciation, normal obsolescence and accidental damage for fixed assets).
In trend terms, real net national disposable income increased by just 0.2% in the September quarter, after 0.1% in the June and March quarters. The increase in the year to the September quarter was just 1.0%. Measured in per capita terms, the corresponding changes were
declines of 0.3% in the September, June and March quarters, and a
reduction of 0.6% in the year to the September quarter of 2012. Over the year to the September quarter 2012, real GDP growth (3.4%) translated into falling per capita real disposable incomes (-0.6%).
In trend terms, the September quarter accounts show flat hours worked over the last year. There was some productivity growth, albeit at slowing rates, and less so in the market sector. Real unit labour costs accelerated over the year to the September quarter of 2012, especially in the non-farm sector.
Slowing GDP growth, falling terms of trade, slowing/poor productivity growth and growing population are combining to shrink Australia's per capita income 'cake'. Aspirations for rising real incomes, or income redistribution (eg, via new tax initiatives in the next Budget to cover Gonski and NDIS reforms), cannot be resolved without distributional conflicts. How should we deal with this income recession? The first step is to acknowledge it, not ignore it. There has been no official commentary on the abovementioned per capita income statistics (the ABS release aside).
Without the lubricant of sustainable real per capita income growth overall, increased real incomes in some parts of the economy can only be sustained if incomes elsewhere fall more. Redistribution of incomes via new policy must be a more negative-sum process than it otherwise would be.
What happens if 'losers' from these processes seek to maintain their incomes, either absolutely or relative to others? One possibility is increased unemployment as total income demands exceed the capacity of Australia's economic 'cake' to pay them. People are priced out of employment. Alternatively, unaffordable bidding-up of incomes induces increased inflation. A third possibility is both of these macro-outcomes. All three are in play around the world today.
As in Europe, I suspect we'll see increased unemployment first. Facilitated by accommodative macro-policy globally, inflation will eventually increase. Finally, as attempts are made to deal with inflation, we may see economies, including Australia, slide into a low growth, high unemployment, and high-ish inflation path.
We've been here before. It's called 'stagflation'. This time, the Western world, especially, is mired in a much larger public and private debt trap. Direct attempts to reduce debt can make matters worse, as Eurozone unemployment experience is showing.
The EU experience is politically unsustainable. Higher inflation may eventually (again) appeal to governments as a sneaky way of legally 'defaulting' on government debt. Creditors get screwed. Debtors' real burdens are eased.
The more durable and more honest solution is to increase productivity. Australia could do much more in this respect. Gary Banks' 'to do' list is a valuable reference. However, most of this list seems to be off the political agenda, and, in important areas, such as the labour market and product markets like transport and energy, we seem to be going
http://www.onlineopinion.com.au/view.asp?article=14480&page=0
access economics?...
Okay, okay...
Things are not as brilliant as they could be, should the Australian dollar not be so highly valued by too many rich geezers... But there is a small problem here...
What has been written above comes from a former "creator" of Access Economics, who has a long beef about "productivity" and is hell-bent in "destroying unions"... He's a full-blown promoter of that shit-bag "Work Choices" which is the old term for what the Liberals (conservatives) are not so secretly planning in industrial relations, under Abbott (though Abbott is trying to disguise the fact)... It amounts to basic slavery and reduction of workers benefits below the struggling line, in favour of executives bonuses... Nothing to do with anything else.
Productivity has nothing to do with workers slacking off or not being pushed hard enough... Productivity has to do with enterprises devising new clever products that have sale-ability and market appeal, not just shifting the blame onto "the workforce" who does not produce enough of the same shit... Productivity has to do with costs that are not affected by the high value of the Australian dollar...
Like Abbott, Geoff Carmody, the author of the article above, is full of negativity, unless, the "said recession" (which is NOT in motion anyhow), would happen under a Liberal (conservative) government thus would be deemed "unavoidable" in regard to the world situation... And the only way to stop the degradation of such unavoidable circumstances would be to flog the workers harder for "more productivity"...
Rot of the first kind... Geoff Carmody writes shit...
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Accessing free publicity from an uncritical media
Ah, the time-honoured rituals of the Australian fiscal cycle.In the first week of May, every year, as tension and excitement — well, OK, mild interest — mounts in Canberra over the last remaining unleaked details of the budget, economic consultants Access Economics (these days part of Deloitte) produces its own economic and fiscal forecasts, in accordance with its status as a sort of alternative, private sector Treasury. The media accords these forecasts the same status as if they were inscribed on stone tablets and hauled down from Black Mountain nearby, and Chris Richardson, with his finely honed instinct for the proximity of any live camera or microphone, is all over the media, speaking authoritatively about what will happen in the coming years.
Now, as the fiscal cycle has expanded to make MYEFO a landmark event, Access has responded by making a big event of its own mid-year forecasts. And didn’t they get a lot of bang for their buck today, with front pages onThe Oz, The Age and The AFR and follow-up media coverage. Just shows what releasing a report on a lazy Sunday (an old Access approach) can do.
As Glenn Dyer and myself have lamented before, Access’s prediction record is none too flash (and I should know, given my own dreadful prediction record), but this doesn’t seem to perturb the media, which enthusiastically details the latest Access forecasts down to decimal places. Apart from the annual ritual throughout the 2000s of predicting that the mining boom was about to collapse, there was its 2008 prediction that unless Wayne Swan went Hannibal Lecter on spending, interest rate hikes would be needed to stop rampant inflation.
By that stage, the threat of the US financial crisis was already enough for Swan and Treasury to put the meat axe away for fear of dramatically cutting demand going into a slowdown, a judgment that subsequent events vindicated. Then there was Access’s early 2009 warning that it would be“impossible to avoid a recession”. The Rudd government promptly did exactly that.
Where this gets more serious than how prediction is a mug’s game and people forgetting the track record of consultants is what Access does with the remarkable free publicity it generates for itself. Access is an economic consultancy that hires itself out to anyone who wants an “independent” economic research report to strengthen their case. And Access isn’t shy about taking sides on major public debates. There was its intervention, paid for by the Distilled Spirits Council of Australia, in the alcopops debate, labelled “as dodgy as a three-day-old kebab” by Nicola Roxon. Then there was its pro-industry efforts to sway the debate over carbon pricing — for the Australian Industry Greenhouse Network and the states, and its work for the big miners over the RSPT (on both the industry’s current tax rate and the apocalyptic consequences of the RSPT), just to name a few.
http://www.crikey.com.au/2011/11/07/accessing-free-publicity-from-an-uncritical-media/
no money kept on the premises...
TWO months ago Swedish furniture company Ikea fingered Australia as one of the most expensive places to do business yet committed to doubling its store footprint in the next few years.It seems Ikea is not alone. For all the whinging by retailers about the tough conditions in Australia, including the high Australian dollar and an online disadvantage due to the GST-free threshold, ever more international retailers are opening up physical stores and customising their websites to target the Australian wallet.
In the past few years groups including Topshop, Gap, Zara and Costco have all opened stores in Australia. Costco is reported to have committed $140 million to opening up more stores. US department store Nordstrom now counts
Australia as its second-biggest overseas market after Canada. And Saks Fifth Avenue's website, for one, now has a box that opens up on the home page saying, ''Now Shipping to Australia. We make it easy to shop from Australia with all prices in Australian dollars, duties and taxes calculated at checkout.'' It is a similar story for Macy's and ASOS, which has opened a warehouse in Australia.
Besides the advantage of the GST-free threshold on internet purchases, which allows shoppers to buy overseas goods under $1000 in value GST free, the high Australian dollar has effectively made the Australian market at least 20 per cent bigger for these international players.
Read more: http://www.smh.com.au/business/offshore-retailers-join-the-party-20121218-2bl2k.html#ixzz2FRR6MXMj
The share market closed just short of a 17-month high, with small losses in energy shares offsetting a broad rally in most other sectors.
The All Ordinaries rose a half of a per cent to close at 4,611 and the ASX 200 posted a similar gain, up 22 points to 4,595.
The major mining shares saw a boost from the 10th straight rise in iron ore prices overnight and was back over US$132, a near five-month high.
BHP Billiton rose 0.9 per cent, while Rio Tinto, which is more exposed to iron ore, gained 1.9 per cent.
Fortescue Metals jumped 2.9 per cent to $4.60.
Shares in the Commonwealth Bank rose a quarter of a per cent on the day it increased its one-third stake in Aussie Home Loans to 80 per cent.
Analysts say the move will strengthen Commonwealth's domination of Australia's mortgage market.
The other three major lenders saw similar results; NAB fared the best, up a half of a per cent in line with the rest of the market.
Embattled surfwear retailer Billabong remains in a trading halt amid speculation a former company executive has made a bid for the company.
http://www.abc.net.au/news/2012-12-18/share-market-strong-despite-energy-sector-losses/4434598
yes, we know...
The world's most powerful nations are sitting on zero interest rates and printing money to get their currencies down, and there's very little Australia can do about it, writes Alan Kohler.
The currency war will be on in earnest in 2013 as the United States, Europe, Japan and China all step up efforts to get their exchange rates down. This will have dramatic consequences for Australia and for the Reserve Bank.
Specifically, ANZ's chief economist Warren Hogan is right: official interest rates are heading lower, probably to 2 per cent by this time next year. The main beneficiary of this will be the housing market, which has already bottomed thanks to this year's cuts, and will continue to recover in 2013.
Will lower rates get the dollar down? Probably not, which means that either the RBA will have to take more direct action on the exchange rate or watch Australia's non-mining industries (apart from housing construction) continue to shrink, painfully.
So next year Australian businesses and investors should see a unique combination: a persistently high exchange rate and historically low interest rates.
http://www.abc.net.au/news/2012-12-19/kohler-currency-wars/4435690?WT.svl=theDrum
Thus who is going to call the bluff?... Is the media up to the task of blaming financial institutions, currency traders and countries like the USA for printing money, rather than blame "Julia" for all the sins?... Ah I see, the media is allied to the Liberal (conservative) party, thus any crap is good enough as long as "Julia" is blamed for it all...
Grow up...