ABCDiamond

A recession or not ?

Most predictions are expecting a positive growth rate of 0.2% for the latest quarter, and an annual economic growth for 2008 at about 1.2%

Later today we will find out how accurate they are, and how far we are from a recession in Australia.

Deutschmaster

I think it's similar to 'how long is a piece of string'.

I reckon though - since economists try to use models to guess about future growth and when things will be back to normal - is that nobody really guesses those surprising failures which wobble the system

bcworld

I wouldn't be surprised if it's a little bit higher than 0.2% having seen some of the other figures yesterday relating to the Dec qtr. There is also the chance that the Sep qtr could be revised down from its original 0.1%, but I'd say almost no chance that both qtrs will be negative = recession.

Whether or not it's a technical recession though, it can feel like one, because the economy is not keeping pace with Australia's high population growth, so on a per capita basis, it probably is recession already. We need to be growing at something like 3% just to keep up with population & deliver improvement in the economy.

ABCDiamond

An interesting point, and one I was actually thinking about while showering this morning...

Australia's population grew by 1.7% during the 12 months ended 30 June 2008, so any annual growth above that would be good, on a per capita basis.

2007 was 3.9% economic growth, and has averaged 3.3% since 1992.

An undated report from DFAT stated that Australia is forecast to grow at 2.75% in 2008-09. I assume July 2008 to June 2009.

An ABS report, yesterday, on the Balance of Payments, quoted:
Only another hour and my curiosity will be satisfied

ABCDiamond

Economy contracts by 0.5% (seasonally adjusted) in the December quarter 2008 -

One more quarter like that, and we will be in recession....

Source:
5206.0 - Australian National Accounts: National Income, Expenditure and Product, Dec 2008

Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 04/03/2009

ABCDiamond

The low figure appears to be a result of the significant reduction in Manufacturing inventories.

Most companies were expecting a significant drop in consumer spending, and may have cut back stocks, to take account of this, but then, with the higher than expected retail turnover in December, the resulting inventories would have been that much lower.

However, an interesting figure for us all, is the:
Real net national disposable income: up 6.4% in the yera ended Dec 2008

Some other figures from http://www.abs.gov.au/ausstats/[email protected]?OpenDocument

Annual figures for the 12 months ended 31st December 2008

GDP (Chain volume measure)
+0.6% Trend
+0.3% Seasonally adjusted

Final consumption expenditure (Chain volume measure)
+1.2% Trend
+1.0% Seasonally adjusted

Gross fixed capital formation (Chain volume measure)
+7.0% Trend
+6.7% Seasonally adjusted

GDP chain price index
+8.5% Original

Terms of trade
+16.5% Seasonally adjusted

Real net national disposable income
+6.4% Trend
+4.8% Seasonally adjusted

Devlin

The non-farm Australian economy is already in a technical recession. It's going to get a lot worse from here on out! Remember this comes despite a huge Rudd stimulus.

bcworld

However the manufacutring index is in severe contraction mode (low 30s) at the moment and 12 year lows - certainly not indicating that inventories will be replenished anytime soon.

I have to admit I got suckered in by the 'Australiaganda' on the various financial reports yesterday, including that snippet above about goods & services. My gut feeling would certainly have been a negative number today.

The Dec Qtr was supposed to be the high point, so I'd say there is zero chance of avoiding a subsequent quarter of contraction....surely you'd expect it to be even worse than Dec? The megastimulus will be too late to influence the qtr.

Three Legs

The next set of quarterly figures will confirm what we already suspected ... recession officianado baby.

Brace yourselves, it could be a long drawn out winter & beyond ...

NKSK version 2

And last quarter was 0.1% growth – hardly positive.
0.1% - 0.5% divided by 2 to get the average is -0.2% each quarter over the last two quarters.

I know this is not how a recession is defined – it should be two consecutive quarters – but it makes Rudd and Swann look increasingly like goats with their comments about the economy over the last 6 months.
But don’t worry because “we are the best placed nation to weather this “– what the hell this is supposed to mean I don’t know. Are Australians really that stupid that as the economy is going down the pan, house prices are collapsing and unemployment is on the rise that they’ll think – “ah but I could be in Ireland!”?

Catch

You can delve into figures all you want ,Is Australia in a recession technically,or is it not.If these figures give you some hope things are ok ,fair enough,but if you are in the building game especially in WA ,you know the recession started months ago.If you got laid off from the mines,if you are trying to sell your house.Australia is a very forward looking optomistic country.Kevin rudd recently tried to tell "things are gonna get tough" credit him for telling the truth,and for honestry.The fools in the West Australian editoral slated him for "spreading doom and gloom",dont forget this paper is in bed with REIWA.Kev has the books in front of him. REIWA are still spreading their propaganda ,with the West as their main tool.Who do you believe

asprilla

Relatively speaking Australia will not be as badly affected by the recession as other countries, specifically UK & USA. That's what is meant when someone says that Australia is better positioned to "weather" it. If you want to know the reasons why this is the case, then you need to compare the accounts for the 3 different countries.

The fact is, Ireland is in a lot of trouble. Lets re-visit this thread in June 2010 and see whether or not you still think that Australians will suffer comparably to Irish.

http://www.economist.com/world/europ...ry_id=13185013

NKSK version 2

Yes I know this.
The point I'm making is that I'm not sure how this actually helps Australians. Every time I see the goon's face I know exactly what he's going to say:
1. We are doing everything we possibly can.
2. That's why we had the fiscal stimulus
3. Australia is well-placed to ride the recession compared with other countries.

and then two weeks later:

4. It's worse than we thought two weeks ago.

asprilla

I would agree with you.... It doesn't appear to do anything to help Australians.

northerner

Why is everyone so scared about being officially in recession? It's only a number ain't it? Everyone's happy when the economy is going gang busters, then a contraction and everyone is seeing doom and gloom...

Don't get it.

Graham