Inflation

[mullokintyre]

The following chart from the ABS shows that since about March 2023, inflationary pressure has been largely internal driven, rather than because of supply constraints, shortages of imported products etc .
The question now is, is this non-tradable or internal demand driven by the government or by private demand?
Perhaps our Treasurer might not want to see this chart.
Mick

 

[JohnDe]

The following chart from the ABS shows that since about March 2023, inflationary pressure has been largely internal driven, rather than because of supply constraints, shortages of imported products etc .
The question now is, is this non-tradable or internal demand driven by the government or by private demand?
Perhaps our Treasurer might not want to see this chart.
Mick


View attachment 183744

I was posting articles in February confirming that, and got blocked by over9k for it -

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www.aussiestockforums.com

https://www.aussiestockforums.com/threads/inflation.8651/post-1213890

 

[over9k]

Big U.S jobs miss. Recession might be about to begin. Might make a new thread.

 

[waterbottle]

Big U.S jobs miss. Recession might be about to begin. Might make a new thread.

2-10 yr spread has univerted. It's time.

 

[over9k]

2-10 yr spread has univerted. It's time.

Need to see if it stays this way. It briefly deinverted a couple of weeks back before rebounding again.

If it remains uninverted I will.

 

[waterbottle]

Need to see if it stays this way. It briefly deinverted a couple of weeks back before rebounding again.

If it remains uninverted I will.

True, it's a noisy indicator.
But the trend has been set for it to reverse. Central banks are cutting rates globally (Canadians have had their 3rd cut). Once they start they don't tend to stop. The Fed has already indicated they'll cut 25bps in September (some are betting on 50bps) so that will only confirm the trend.
The whole notion that central bankers can be data driven has been proven bull****. They may as well read tea leaves when the data they've been provided is constantly revised by huge margins.

 

[over9k]

"Demand weakness" is becoming a very common theme no matter which markets are being examined.

The one exception is australia's housing which is just a whooooole rabbit hole all on its own.

 

[waterbottle]

View attachment 183956View attachment 183955View attachment 183957View attachment 183954

"Demand weakness" is becoming a very common theme no matter which markets are being examined.

The one exception is australia's housing which is just a whooooole rabbit hole all on its own.

All part of the plan.

Oz property will remain buoyant as it has behaved in previous recessions.

 

[qldfrog]

All part of the plan.

Oz property will remain buoyant as it has behaved in previous recessions.

Probably right

 

[wayneL]

All part of the plan.

Oz property will remain buoyant as it has behaved in previous recessions.

Those with their hands on the economic levers will ensure that it is so

 

[sptrawler]

Sounds as though Jim Chalmers has been put straight by the RBA.
I think most middle class aussies were well aware of what is causing the problem, despite Jim blaming everyone else, they are going to have to come up with a plan.

Inflation is ‘smashing’ incomes more than interest rates are

Inflation and taxes are eroding household incomes by triple as much as interest rates, undermining Jim Chalmers’ claim the RBA is hurting the economy.

www.afr.com

Inflation and higher taxes are eroding household incomes by triple as much as elevated interest rates, undermining Treasurer Jim Chalmers’ claim that the Reserve Bank of Australia’s monetary policy is “smashing” the economy.

Analysis from market economists and the RBA show that household disposable income has been mostly squeezed by steep price rises for goods and services since the central bank imposed its first of 13 interest rate rises in May 2022.


Total household incomes grew 6.2 per cent over the year to June 30, national accounts data published last week showed.

Inflation wiped out 4.4 percentage points of the income gains, compared to higher interest rates eroding 1.3 percentage point and increased tax reducing real incomes by a further 1.1 percentage point, according to former RBA economist Jonathan Kearns.

The erosion by inflation is greater than interest rates,” Dr Kearns said.

“The impact of inflation is spread across all households, so everyone is feeling it. Interest rates are concentrated for just some households.”

 

[TimeISmoney]

Sounds as though Jim Chalmers has been put straight by the RBA.
I think most middle class aussies were well aware of what is causing the problem, despite Jim blaming everyone else, they are going to have to come up with a plan.

Inflation is ‘smashing’ incomes more than interest rates are

Inflation and taxes are eroding household incomes by triple as much as interest rates, undermining Jim Chalmers’ claim the RBA is hurting the economy.

www.afr.com

Inflation and higher taxes are eroding household incomes by triple as much as elevated interest rates, undermining Treasurer Jim Chalmers’ claim that the Reserve Bank of Australia’s monetary policy is “smashing” the economy.

Analysis from market economists and the RBA show that household disposable income has been mostly squeezed by steep price rises for goods and services since the central bank imposed its first of 13 interest rate rises in May 2022.


Total household incomes grew 6.2 per cent over the year to June 30, national accounts data published last week showed.

Inflation wiped out 4.4 percentage points of the income gains, compared to higher interest rates eroding 1.3 percentage point and increased tax reducing real incomes by a further 1.1 percentage point, according to former RBA economist Jonathan Kearns.

The erosion by inflation is greater than interest rates,” Dr Kearns said.

“The impact of inflation is spread across all households, so everyone is feeling it. Interest rates are concentrated for just some households.”

I laughed to myself when they got rid of Philip Lowe, if they let him do his job we most likely wouldn't be in this situation.

 

[Value Collector]

Sounds as though Jim Chalmers has been put straight by the RBA.
I think most middle class aussies were well aware of what is causing the problem, despite Jim blaming everyone else, they are going to have to come up with a plan.

Inflation is ‘smashing’ incomes more than interest rates are

Inflation and taxes are eroding household incomes by triple as much as interest rates, undermining Jim Chalmers’ claim the RBA is hurting the economy.

www.afr.com

Inflation and higher taxes are eroding household incomes by triple as much as elevated interest rates, undermining Treasurer Jim Chalmers’ claim that the Reserve Bank of Australia’s monetary policy is “smashing” the economy.

Analysis from market economists and the RBA show that household disposable income has been mostly squeezed by steep price rises for goods and services since the central bank imposed its first of 13 interest rate rises in May 2022.


Total household incomes grew 6.2 per cent over the year to June 30, national accounts data published last week showed.

Inflation wiped out 4.4 percentage points of the income gains, compared to higher interest rates eroding 1.3 percentage point and increased tax reducing real incomes by a further 1.1 percentage point, according to former RBA economist Jonathan Kearns.

The erosion by inflation is greater than interest rates,” Dr Kearns said.

“The impact of inflation is spread across all households, so everyone is feeling it. Interest rates are concentrated for just some households.”

 

[over9k]

Accurate. Even trudeau has pivoted massively anti-china.

 

[waterbottle]

Accurate. Even trudeau has pivoted massively anti-china.

Is the West really going to give up on a government with nukes and 1 billion people? Nah I don't think so...

Manufacturing needs to happen. So who's going to do it?

1. Africa - corruption is rife, infrastructure not available. See how China went with industrializing east Africa.
2. India - possibly, but it has it's own corruption and political issues. Weighed down by the caste system.
3. South East Asia - where exactly? and at what cost? Too many governments with too many moving parts.
4. Middle East - Unstable
5. The West - CFMEU can't even be shut down for literal bikie-induced corruption; demographics also suck and governments are getting push back for high levels of immigration with politics stoking possiblity of civil war in UK, France, Germany and the US.

The only thing that will replace China is robotics and until that happens, we're just cutting off our nose to spite our face IMO

 

[over9k]

Nonetheless, it's still happening. Tariffs are going up everywhere. Everywhere.

 

[waterbottle]

Nonetheless, it's still happening. Tariffs are going up everywhere. Everywhere.

How long is that going to be possible for?
The cynical view of globalism is that it allowed the West to dump shitty jobs on desperate people elsewhere in the world. Unless that trend is going to reverse in a meaningful way, or we have a replacement for China, the long term trend is we're going to be asking China to keep doing what it's doing.
To their credit, and unlike many Western nations, they are able to radically upgrade their infrastructure and forcefully direct their citizens in ways that wouldn't be accepted in the West (see COVID).
China 2020 is not China 2025.

 

[divs4ever]

Is the West really going to give up on a government with nukes and 1 billion people? Nah I don't think so...

Manufacturing needs to happen. So who's going to do it?

1. Africa - corruption is rife, infrastructure not available. See how China went with industrializing east Africa.
2. India - possibly, but it has it's own corruption and political issues. Weighed down by the caste system.
3. South East Asia - where exactly? and at what cost? Too many governments with too many moving parts.
4. Middle East - Unstable
5. The West - CFMEU can't even be shut down for literal bikie-induced corruption; demographics also suck and governments are getting push back for high levels of immigration with politics stoking possiblity of civil war in UK, France, Germany and the US.

The only thing that will replace China is robotics and until that happens, we're just cutting off our nose to spite our face IMO

and if i remember correctly .. a video posted here on electric bikes/scooters showed some Chinese factories with a fair amount of robots in action , already

so the Chinese may be ahead in that area as well

arguably India is the only major rival to China , but they have their own bottle-necks to sort out first ( will that take years or decades )

 

[Smurf1976]

How long is that going to be possible for?
The cynical view of globalism is that it allowed the West to dump shitty jobs on desperate people elsewhere in the world. Unless that trend is going to reverse in a meaningful way, or we have a replacement for China, the long term trend is we're going to be asking China to keep doing what it's doing.

Globalisation stalled in 2008 so far as I can determine. Since then it's gone sideways and in more recent times has been contracting.

2008 is one of those major inflection points where if one starts looking at charts of random economic measures, it's there and it's permanent.

Much like the world has never been the same since the events of the 1970's first with the US dropping all links to the gold standard, then the oil crisis, then the Lima Declaration, then the second oil crisis. Those were similar inflection points, the world never went back to how it was previously. Go through the charts and it's visible, it was a permanent shift.

Australia's recent economy is heavily linked to those events of the 70's. Our exports of coal and gas are far more recent than I suspect many realise.

Our exports of thermal coal, which peaked at 212.7 million tonnes in 2019-20 were a mere 1 million tonnes in 1973-74 and just 0.176 million tonnes in 1968-69. They didn't exceed 10 million tonnes until 1980-81, 50 million tonnes in 1990-91 and 100 million tonnes in 2002-03. Prior to all that, we exported coking coal for a long time but there was no real market for thermal coal, it just wasn't something anyone wanted to buy until the oil crisis.

Same with LNG. Export was literally zero prior to 1989-90 when the first exports commenced by WA, the development of which was a direct response to the oil crises. Prior to that, gas was just too much hassle to ship for anyone to be keen on the idea beyond limited projects to develop the technology etc.

What we did have though were a lot of factories. Everything from cars to office paper to TV's all made in Australia.

So the events of the 70's triggered a permanent shift that took an extended period to play out and most of the effects occurred 20 - 40 years after the triggers.

2008 was in my view a similar tipping point reinforced by the events of 2020. A permanent shift that triggers other events and we're now starting to see the effects of those. Still a long way to go though, most of the effects are ahead of us over the next ~20 years.

One of those effects is deglobalisation and rising protectionism.

 

[waterbottle]

Globalisation stalled in 2008 so far as I can determine. Since then it's gone sideways and in more recent times has been contracting.

2008 is one of those major inflection points where if one starts looking at charts of random economic measures, it's there and it's permanent.

Much like the world has never been the same since the events of the 1970's first with the US dropping all links to the gold standard, then the oil crisis, then the Lima Declaration, then the second oil crisis. Those were similar inflection points, the world never went back to how it was previously. Go through the charts and it's visible, it was a permanent shift.

Australia's recent economy is heavily linked to those events of the 70's. Our exports of coal and gas are far more recent than I suspect many realise.

Our exports of thermal coal, which peaked at 212.7 million tonnes in 2019-20 were a mere 1 million tonnes in 1973-74 and just 0.176 million tonnes in 1968-69. They didn't exceed 10 million tonnes until 1980-81, 50 million tonnes in 1990-91 and 100 million tonnes in 2002-03. Prior to all that, we exported coking coal for a long time but there was no real market for thermal coal, it just wasn't something anyone wanted to buy until the oil crisis.

Same with LNG. Export was literally zero prior to 1989-90 when the first exports commenced by WA, the development of which was a direct response to the oil crises. Prior to that, gas was just too much hassle to ship for anyone to be keen on the idea beyond limited projects to develop the technology etc.

What we did have though were a lot of factories. Everything from cars to office paper to TV's all made in Australia.

So the events of the 70's triggered a permanent shift that took an extended period to play out and most of the effects occurred 20 - 40 years after the triggers.

2008 was in my view a similar tipping point reinforced by the events of 2020. A permanent shift that triggers other events and we're now starting to see the effects of those. Still a long way to go though, most of the effects are ahead of us over the next ~20 years.

One of those effects is deglobalisation and rising protectionism.

Globalisation stalled in 2008 so far as I can determine. Since then it's gone sideways and in more recent times has been contracting.

2008 is one of those major inflection points where if one starts looking at charts of random economic measures, it's there and it's permanent.

Much like the world has never been the same since the events of the 1970's first with the US dropping all links to the gold standard, then the oil crisis, then the Lima Declaration, then the second oil crisis. Those were similar inflection points, the world never went back to how it was previously. Go through the charts and it's visible, it was a permanent shift.

Australia's recent economy is heavily linked to those events of the 70's. Our exports of coal and gas are far more recent than I suspect many realise.

Our exports of thermal coal, which peaked at 212.7 million tonnes in 2019-20 were a mere 1 million tonnes in 1973-74 and just 0.176 million tonnes in 1968-69. They didn't exceed 10 million tonnes until 1980-81, 50 million tonnes in 1990-91 and 100 million tonnes in 2002-03. Prior to all that, we exported coking coal for a long time but there was no real market for thermal coal, it just wasn't something anyone wanted to buy until the oil crisis.

Same with LNG. Export was literally zero prior to 1989-90 when the first exports commenced by WA, the development of which was a direct response to the oil crises. Prior to that, gas was just too much hassle to ship for anyone to be keen on the idea beyond limited projects to develop the technology etc.

What we did have though were a lot of factories. Everything from cars to office paper to TV's all made in Australia.

So the events of the 70's triggered a permanent shift that took an extended period to play out and most of the effects occurred 20 - 40 years after the triggers.

2008 was in my view a similar tipping point reinforced by the events of 2020. A permanent shift that triggers other events and we're now starting to see the effects of those. Still a long way to go though, most of the effects are ahead of us over the next ~20 years.

One of those effects is deglobalisation and rising protectionism.

Deglobalisation and protectionism in an ageing world with fewer jobs is a recipe for either hyperinflation or rebellion.

No government would jeopardise their own future by leading their citizens down a path where goods are increasingly scarce and harder to obtain.

So if you think that is the path we are heading down, then you really need to explain what the future holds for governments.

Unless we have some tech innovation that leads to improved goods production I.e. robotics, and we provide a universal basic income, the world will still need a low cost producer I.e. China.