The state of the economy at the street level

[sptrawler]

I've been watching a slow wind down, consumers are slowly tightening their belts as disposable income slowly shrinks, and as fear of a recession or job loss starts to become a possibility in their world.

Over the past three months my business has had an increase in the number of people coming in with their resumé looking for a job or work experience. I haven't seen that for a few years.

Which IMO is exactly what is meant to happen, productivity is at an all time low, improving productivity requires workers to be more motivated, what you described above is an exercise in increasing motivation.
The trick is not to be blamed for it, Hawke did well landing it, Keating wore it, Albo learnt from the school of hard knocks.
He is doing ok, people are stitched up to the eyeballs, they can't kick up because immigration is supplying a ready replacement for the disgruntled worker and a new norm is being cast where owning a home isn't going to be for the working class.
Intergenerational loans will soon be suggested IMO.
But in the Govts defence, there isnt many options, doing business in Australia is extremely high.

 

[JohnDe]

Which IMO is exactly what is meant to happen, productivity is at an all time low, improving productivity requires workers to be more motivated, what you described above is an increase in motivation.

In the past, yes. Today there are too many people on the government welfare teat.

And when more voters are reliant on government subsidies and assistance they vote for the same. While the high income earners become fewer and taxed higher.

We have a few more years of the same before we see any significant change.

 

[sptrawler]

In the past, yes. Today there are too many people on the government welfare teat.

And when more voters are reliant on government subsidies and assistance they vote for the same. While the high income earners become fewer and taxed higher.

We have a few more years of the same before we see any significant change.

Thats very true, but you have to start somewhere, our economy can't sustain our welfare system long term, so slowly they have to make adjustments.

At the moment they are increasing the population, to increase the insecurity in the workforce, which makes them less receptive to moving jobs and more compliant to increasing productivity.

The big elephant in the room is how to increase productive investment, we don't have any advantage on that front, power is expensive, labour is expensive, work conditions are expensive, red tape is expensive, green tape is expensive, rehabilitation of habitat is expensive, transport costs are expensive, port costs are expensive.
Let's be honest, Australia is going to have to find a balance between social conscience and what is actually sustainable

I posted a thread years ago Australia should sell W.A to China, at that time it was a bit of a quip, but in reality it may end up closer to reality than some think.

 

[qldfrog]

"Thats very true, but you have to start somewhere, our economy can't sustain our welfare system long term, so slowly they have to make adjustments."
No..they do not
Last 30 years of France politics and economics will show you it can go on and on.
The population get replaced by migrants , the economy collapses, and the ALP will remain in power at every election promising 60% of the voters whatever remains untaxed in the other 40%
A few political changes with soft right..with roughly same program
Et voila Macron 2024 /australia 2044...
Think about that post in 20y

 

[farmerge]

I and my fellow taxpayer are glad that you are happy.

On doubt that there will be one or two correspondents in the ASF who would be most unhappy , since they love paying tax.

 

[UMike]

We are about to undergo our second week of forced shutdown in Production. Due to lack of work.

I had to attend a meeting of an EBA working group. So depressing the workers act like privileged morons.

A week ago I got an offer from the companies Thai manufacturing arm to set up a production line there. After the meeting I signed to offer and emailed it to them.
Another adventure.
But Australia is missing out.

 

[farmerge]

We are about to undergo our second week of forced shutdown in Production. Due to lack of work.

I had to attend a meeting of an EBA working group. So depressing the workers act like privileged morons.

A week ago I got an offer from the companies Thai manufacturing arm to set up a production line there. After the meeting I signed to offer and emailed it to them.
Another adventure.
But Australia is missing out.

@UMike No 1 must always come first UMike.

 

[qldfrog]

We are about to undergo our second week of forced shutdown in Production. Due to lack of work.

I had to attend a meeting of an EBA working group. So depressing the workers act like privileged morons.

A week ago I got an offer from the companies Thai manufacturing arm to set up a production line there. After the meeting I signed to offer and emailed it to them.
Another adventure.
But Australia is missing out.

Good luck, Thailand is an interesting country, with a nice future ahead.
All the best and keep us posted

 

[UMike]

Good luck, Thailand is an interesting country, with a nice future ahead.
All the best and keep us posted

LOL The wife doesn't think so.

It's actually really struggling on the Street and political level.

 

[qldfrog]

LOL The wife doesn't think so.

It's actually really struggling on the Street and political level.

You will learn more there, plenty to visit around with a cheap flight, even europe trip becomes cheaper less daunting.
I like northern Thailand.
But sad that Australia can not offer you these opportunities.
My startup had to be China based for similar economic conditions
Thailand will be a breeze...

 

[sptrawler]

LOL The wife doesn't think so.

It's actually really struggling on the Street and political level.

You just need air con for the hot months, Thailand is on the up, as frog said there will be a lot of opportunities there.
We for the foreseeable future, are on the slide, so lucky you opportunity knocks enjoy the voyage.

Gas giant Australia prepares for the unthinkable: Importing supplies for the first time

Australia is one of the world's biggest gas exporters, but we're about to start importing it from overseas.

www.abc.net.au

 

[JohnDe]

Our so called leaders' have lost the plot. Australia a gas rich country is going to import gas because our governments don't want to extract gas so that we can get to net zero emissions.

But it didn't start with the current crop this goes all the way back to the Rudd/Gillard years and hasn't stopped. We can't put all the blame on political class. Blame must be equally proportioned amongst the citizens that have allowed this to happen with blasé attitudes during our wealth growth period from the early 2000's. We got lazy while the elites and business leaders ran their own agenda, and we coddled a generation that believe the world is heading for destruction and money comes from government printers.

More worrying is that such a dismal result has been on the cards since before the Covid-era because of our dire productivity, especially in the public realm, over half a generation.​

​

The cost of policy inaction from both sides of politics is now in plain view and we’re going to have to borrow more to simply stand still.​

Rates will stay higher for longer in a weak economy because our policymakers are at odds

The economy is in a perilous state, and not simply because the scoreboard shows that at 1 per cent Australia has recorded the weakest annual growth outside a crisis since the early 1990s recession.

The signs of secular malaise are mounting: our material living standards are in decline, productivity growth is dreadful and government debt is set to rise.

To invoke the speech rhythms of the current custodian, the economy is dishevelled and drifting.

Gross domestic product, the goods and services we 27 million Australians collectively produce, has fallen for six consecutive quarters in per capita terms.

Household consumption per person, too, has fallen for six straight quarters.

What is truly astounding is that our economy can’t even supply this level of constrained demand, where consumers are skint and governments are living large, so inflation is persistently too high and the Reserve Bank maintains its monetary squeeze.

After the national accounts were released, Jim Chalmers skited that the public sector, whose recurrent spending grew by 4.7 per cent over the past year, was keeping the country afloat.

The Treasurer claimed that cost-of-living relief and spending on health care were the main drivers of that spending spree.

That’s exactly what the voter research says and where Labor’s hardheads want the message to stay all the way to polling day: we feel your pain, the other side only wants to inflict some more through “austerity” and “slash and burn”.

Public munificence, which has hit a record 27.6 per cent of GDP, may suit Chalmers’ “saviour” narrative, but that’s not how this country should operate, especially when the RBA is trying to achieve a better balance between supply and demand.

As the Commonwealth Bank’s head of Australian economics Gareth Aird observed, economic growth in the private sector has been non‑existent over the first half of this year.

“It is only public spending that has kept GDP growth positive over that period,” Aird said.

“This is an unusual situation and is not an outcome that should be viewed favourably in an environment of elevated inflation.”

Inflation, a bigger tax take, and the RBA’s interest-rate policy are battering household disposable incomes, which in turn is leading to consumers spending virtually all their earnings and some reducing what remains of savings squirrelled away during the pandemic.

A pay cut from the world for our exports is providing more drag on our prosperity.

That this cyclical drop in performance was largely anticipated by official and private forecasters, and is the result of 13 cash rate hikes, is cold comfort.

More worrying is that such a dismal result has been on the cards since before the Covid-era because of our dire productivity, especially in the public realm, over half a generation.

The cost of policy inaction from both sides of politics is now in plain view and we’re going to have to borrow more to simply stand still.

EY chief economist Cherelle Murphy said this unprecedented level of spending by governments “is doing nothing to improve productivity”, with GDP per hour worked down 0.8 per cent in the June quarter, and only 0.5 per cent higher over the year.

“For employers, this is bad news,” she said.

Murphy added that this meant unit labour costs – which feed into inflation – rose by 2 per cent in the year.

“This is the worst possible combination of statistics, as it means Australian businesses are gaining very little from government spending, which is focused on short-term cost-of-living relief for households and band-aid fixes to neglected problems,” she said.

“For the private sector, there’s a lack of encouragement to invest for our long-term prosperity.”

If you have a mortgage, look away.

Team Australia, split in public, are acting at cross purposes with their respective policy tools.

As Murphy says, the lack of co-ordination between Canberra and the RBA means the path to low and stable inflation – and therefore lower interest rates – is slower than it needs to be.

Did someone say “carefully calibrated for the conditions”?

Smash it up and be damned.

 

[qldfrog]

Our so called leaders' have lost the plot. Australia a gas rich country is going to import gas because our governments don't want to extract gas so that we can get to net zero emissions.

But it didn't start with the current crop this goes all the way back to the Rudd/Gillard years and hasn't stopped. We can't put all the blame on political class. Blame must be equally proportioned amongst the citizens that have allowed this to happen with blasé attitudes during our wealth growth period from the early 2000's. We got lazy while the elites and business leaders ran their own agenda, and we coddled a generation that believe the world is heading for destruction and money comes from government printers.

More worrying is that such a dismal result has been on the cards since before the Covid-era because of our dire productivity, especially in the public realm, over half a generation.​

​

The cost of policy inaction from both sides of politics is now in plain view and we’re going to have to borrow more to simply stand still.​

Exactly John, blame is often put on politicians etc..but as long as vote is representative of voters and i still think it is here and in the EU/UK zone..less so in the US.
So the reason i do not cry for France, or now Australia..we got what we deserve.
I obviously did not vote for that so try to apply to one of the few rights left..to not work, and to get out...
The blame is on me if i am still in Australia in 24.
My wife's choice but i still agreed so my responsibility.
I live on the sunny coast and my usual cafes/ shopping runs are in touristy areas: mostly domestic travel and NZ wintering.
I have the feeling it is less busy..but just recently..a month or so ago for the start
Will have to wait for school holidays to confirm.
And RE in the hinterland definitely cooling for prices..

 

[JohnDe]

Not 18 or 20 months, economies across the globe are different to when the old indicators gave us the information we required. Things changed when Covid hit, work from home has changed everything, property values have given homeowners increased cash draw capabilities from banks, fear of labour shortages has kept people in jobs longer than would have been normal during a 1990's type recession, and so on.

I've been watching a slow wind down, consumers are slowly tightening their belts as disposable income slowly shrinks, and as fear of a recession or job loss starts to become a possibility in their world.

Over the past three months my business has had an increase in the number of people coming in with their resumé looking for a job or work experience. I haven't seen that for a few years.

It's possible that we're on a tight rope, we could fall and experience a massive correction or make it to the other side after a few stumbles and a bit of fear. We have done it before; it is all down to productivity government policy and the mining industry. Not looking so good thins time though, hey?

"full employment stagflation" I think we will see more of this type of wording soon, unless the government can quickly get productivity improvements out to small businesses and the working class.

While household spending rose by just 0.5 per cent in the year to June, recurrent government spending was up by 4.7 per cent. GDP per capita has fallen in each of the past six quarters.​

​

This has been described by many as a recession, but that is not the right term.​

​

In classic recessions – including those we had in the 1980s and ’90s – aggregate demand and employment fall off a cliff, resulting in mass unemployment, a tsunami of business failures and financial market panic. Today, in contrast, unemployment remains at close to historical lows and our sharemarkets remain buoyant (if volatile). While it’s true business insolvencies are rising, many parts of the corporate sector remain profitable.​

As expected, Wednesday’s national accounts confirmed that the economy has ground to a virtual halt.

In the June quarter, our GDP rose by only 0.2 per cent. Our annual economic growth rate has fallen to 1 per cent, a result we have not seen in more than 30 years, leaving aside the pandemic.

While household spending rose by just 0.5 per cent in the year to June, recurrent government spending was up by 4.7 per cent. GDP per capita has fallen in each of the past six quarters.

This has been described by many as a recession, but that is not the right term.

In classic recessions – including those we had in the 1980s and ’90s – aggregate demand and employment fall off a cliff, resulting in mass unemployment, a tsunami of business failures and financial market panic. Today, in contrast, unemployment remains at close to historical lows and our sharemarkets remain buoyant (if volatile). While it’s true business insolvencies are rising, many parts of the corporate sector remain profitable.

When growth slows to a crawl yet labour and capital remain fully employed, we are experiencing a supply crunch. In other words, a productivity crisis. Jim Chalmers talks about private demand being weak, which is true, but the economy’s productive capacity is weaker still, a reality he is conspicuously ignoring. As James Carville might have said: “It’s the supply side, stupid.”

This full employment stagflation is political poison, which is why Chalmers has decided to shirt-front the RBA in recent days, accusing it of “smashing” the economy. John Howard, writing in these pages on Wednesday, was right. Chalmers’ crude attack on the RBA only diminishes him.

After all, Chalmers’ fingerprints are all over the RBA board. Governor Michele Bullock and deputy governor Andrew Hauser were appointed by the government on his recommendation, as were two other recent board appointees.

Chalmers’ chief economic adviser and close confidant, Treasury secretary Steven Kennedy, is also a full voting member of this body and by far the most influential person on it apart from Bullock. (While Kennedy cannot be directed by Chalmers and is nominally independent, I would be surprised if his view on inflation differed much from his boss’s.)

Bullock and her board have been highly sensitive to the government’s desire to protect our post-pandemic employment gains. Some would say they’ve bent over backwards to please it.

In stark contrast to our peer central banks, including the US Federal Reserve and the Bank of England, which hiked their official rates into the fives to bring down inflation more quickly, the RBA board – notwithstanding the 13 consecutive rate increases it approved – has been reluctant to take the cash rate beyond 4.35 per cent.

It has tolerated inflation being higher and longer in Australia – and risked a breakout of inflationary expectations – to honour the full employment part of its mandate. Yet Chalmers, knowing full well what the bank is trying to do, accuses it of smashing the economy.

Let’s also not forget how diplomatic Bullock has been towards the government. When Chalmers and Albanese objected to the RBA’s recent factual observation (in its statement on monetary policy) that government spending was adding to demand in the economy, Bullock was quick – perhaps too quick – to appease them, telling a parliamentary committee that public demand was “not the main game” on inflation.

If Chalmers took his responsibilities more seriously – and were a cannier politician – he would’ve acted on the RBA’s initial warning, calling on his state counterparts to tighten their fiscal belts and promising that Canberra would do the same. But instead he chose the soft option of shooting the messenger.

To adapt Milton Friedman’s famous phrase, inflation is “always and everywhere” a political (as well as a monetary) phenomenon: a sure sign of a lack of political will and economic policy failure.

If Chalmers really wanted lower interest rates and inflation, he could help bring that result about. Not by browbeating Bullock but by judiciously cutting (or at least pausing) federal government spending and doing more to unlock the supply side of the economy – hitting the pause button on the government’s renewable energy crusade and reversing its retrograde industrial relations changes would be a good start.

I dare say this would be statesmanlike but, instead of the brawler-statesman (the term Chalmers coined for Paul Keating), we are left only with the brawler, and a much diminished one at that.

If anything, this latest episode is worse than a case of boorish behaviour from Chalmers. By so egregiously evading his responsibility for managing the economy, he has – in effect – abdicated the position of treasurer. History shows that when prime ministers allow this to happen, they and their parliamentary colleagues pay a heavy political price.

https://www.theaustralian.com.au/commentary/chalmers-has-become-the-brawler-statesman-now-its-time-bullock-pushed-back/news-story/9ed31978577ae4b00f925da2b5466208

 

[wayneL]

I'm still seeing mixed messages over here in Perth. Real estate still seems to be insane.

One of the pubs I go to seems to be very very quiet, yet another one seems to be busier than normal.

Also I have a fair few clients in the mining industry (who doesn't in Perth? lol) and hearing of quite a few layoffs.

I do feel that the cost of doing business (and cost of living of course) is really *starting to bite.

 

[IFocus]

Rising interest rates have soften the economy... I am shocked.

Government cost of living handouts (even mining have their hand out) and emigration are keeping the boat afloat just, maybe.

Contradictions of demanding handouts while wanting tax cuts, reduced government spending, etc.

Importing gas because of market forces not sovereign requirements points to the madness.

 

[JohnDe]

Rising interest rates have soften the economy... I am shocked.

Government cost of living handouts (even mining have their hand out) and emigration are keeping the boat afloat just, maybe.

Contradictions of demanding handouts while wanting tax cuts, reduced government spending, etc.

Importing gas because of market forces not sovereign requirements points to the madness.

Luckily, we have fairly low interest rates at the moment compared to others.

If people were able to keep more of their income and the rate of inflation was lower, and the cost of power and gas at reasonable levels, the government wouldn't have to give so many handouts.

Handouts and high taxes increase inflation and lower productivity.

Yes, it is total madness when governments block the access of our gas, forcing companies to import gas to meet demand.

 

[divs4ever]

Luckily, we have fairly low interest rates at the moment compared to others.

If people were able to keep more of their income and the rate of inflation was lower, and the cost of power and gas at reasonable levels, the government wouldn't have to give so many handouts.

Handouts and high taxes increase inflation and lower productivity.

Yes, it is total madness when governments block the access of our gas, forcing companies to import gas to meet demand.

View attachment 183749

IMO not that lucky , i estimate a Central Bank need a 5% rate to give it room to move to help a distressed economy in a meaningful way

having the similar rates as the EU is an ominous sign ( considering the current 'healthy ' state of the EU )

 

[wayneL]

"Rising interest rates have soften(sic) the economy"

The question is - rising from where and to what. Interest rates are still not anywhere near the long-term average, and could be argued that are still negative in real terms. (Depending on what figures we actually believe and their effect upon the economy)

It reveals the real state of the economy and in addition one should examine the Cantillon effect with regards to the same.

It is moronic in the extreme to truncate interest rate history back to zero interest rates and without regard to projecting interest rate policy forward.

If I can draw a metaphor from my own profession, given a particular pathology I can fiddle with the biomechanics to extend the working life of the animal, however the ultimate result, even though extending the working life, is ultimately calamitous. It would have been far better for the owner of the animal to employ a preventative protocol, even though that initially it may have been more expensive.

 

[JohnDe]

With Bill gone, can the Labor government control itself? I don't think so. If Labor wins the next election and continues down the road it has taken, we could see the biggest and most dramatic changes in history.

The former Labor leader’s thinking began to coalesce this idea more recently, with colleagues saying he was dismayed at the direction Labor was going on a range of issues.​

Those still loyal to him in the caucus say he was one of the last sensible heads left in the Labor cabinet.​

Exit of a Labor warrior should ring alarm bells for Albanese

On Bill Shorten’s fridge at his Melbourne home is a magnet he once bought from the Churchill War Rooms in Westminster.

“Never give up”, it reads.

Friends who would come to visit took that as a sign that his political enemies would never leave.

“We all thought this meant that they would have to take him out in a body bag,” says a close friend.

His enemies have been denied that occasion.

Shorten leaves on his own terms with his integrity intact and a legacy that now looks impressive in comparison to many of his colleagues.

As another friend noted: He also takes up a job as Vice Chancellor of the University of Canberra that will be paid better than the prime minister.

“And he’ll have a better house!” reflects one of his closest confidantes of the residence in Canberra that will become his new home from February next year.

Shorten has been talking about retirement for some time. The university gig came up last summer and he has been ruminating over it since.

The former Labor leader’s thinking began to coalesce this idea more recently, with colleagues saying he was dismayed at the direction Labor was going on a range of issues.

As a strong supporter of the Jewish community in Melbourne, and considered a key part of the remaining pro US alliance ballast of the Labor right, privately he was appalled at the position Albanese had taken on Gaza.

Shorten’s departure before the next election says more about what he thinks about Labor’s prospects at the next election than perhaps his own personal ambition.

Those close to him say he was coming to the belief that the government was no longer assured of a second term.


Former federal Labor leader Bill Shorten announces his retirement at Parliament House in Canberra with his wife Chloe and daughter Clementine by his side. Picture: NewsWire.

It sends a sobering message about what the most savvy person in the party thinks about its future.

“He has been talking about it a long time but I thought he was just de-stressing,” says another friend.

“But he hates them … and you can hardly blame him.”

The Victorian division, now dominated by the Cons faction of Richard Marles, Stephen Conroy and the SDA, have made political life intolerable.

Their brutal takeover of the branch — aided by Albanese — has seen all Shorten’s allies put to the sword.

The most recent re-iteration of this occurred only weeks ago with a roll over of the federal intervention in Victorian over preselections.

The Marles group will swoop in on his seat of Maribyrnong.

“They got what they wanted but that won’t help with their re-election,” another colleague said.

“The problem with a winner takes all approach is that it leads to outcomes like this.”

Shorten had held some hope that he may eventually return to the leadership, convinced that Albanese would fail, but these hopes began to fade some time ago.

Those still loyal to him in the caucus say he was one of the last sensible heads left in the Labor cabinet.

In the end he had too few allies left in the caucus.

Reflecting on his role in the tearing down of the Rudd/Gillard leaderships, Shorten borrowed from Frank Sinatra: “Regrets I’ve had a few bit too few to mention. I did what I had to do. And I did it may way.”

As another of Shorten’s colleagues said of Albanese and the Marles faction: “Be careful what you wish for”.

As Liberal campaign veteran Brian Loughnane said of Shorten’s departure: “This is a big loss for Labor, he is one of the Albanese government’s few competent ministers”.

​