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Re: Australian economy

Postby Lefty » 27 May 2017, 08:21

HBS Guy wrote:Time to man the barricades!


It's as if a perpetual motion machine was set up and the course has been programmed and locked in. Doesn't matter how many smaller icebergs dent us and that a big one ultimately looms dead ahead. It's remarkable that the actual outcomes of this relentless drive seem to be considered utterly irrelivent to the question "should we keep going down this path?"
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Re: Australian economy

Postby HBS Guy » 07 Jun 2017, 12:26

Australian GDP grew by .3% in last quarter, mostly due to mining company profits due to higher commodity prices. Or so says Morriscum.

Despite this: we are in recession IMHO. I say this from jobs and wages growth or lack of it. Casual and part time jobs are growing which do not give people the income to buy homes, cars etc.
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Re: Australian economy

Postby Lefty » 08 Jun 2017, 06:26

Bilbo - Australian economy was slowing fast in March-quarter 2017 and outlook negative

And from Macrobusiness - Canberra’s suicidal war on wages

we are in recession IMHO. I say this from jobs and wages growth or lack of it. Casual and part time jobs are growing which do not give people the income to buy homes, cars etc.


Dead right. A strongly growing real economy does not see workers incomes falling across the board, with the labour force becoming part-timed and casualised. Wage growth has fallen to it's lowest level in at least 40 years, lower than during or following either of the two recessions we've had in that time and they are even actually shrinking in nominal terms.

This just should not occur in a healthy economy! Morrison seems to have dropped an acid trip and had a vision of wage growth rocketing back up to mining boom levels any old day now - and well he might I guess because budget forecasts rely heavily on growth in workers wages.

Paul Keating (not withstanding that he was one of the architects of some of this stuff :mad :sad ) and Sally McManus of the ACTU have both recently said it like it is - neo-liberalism has run it's course. Nearly a decade after Bilbo made one of the few forecasts I have seen him make that did not come to pass ("Economic growth must now be led by income growth, not credit growth") we are now almost out of room for the household sector to keep up spending via credit growth. It has gone on this long after Bilbo's 2008 prediction because the powers that be had absolutely no intention of ditching the already-failing neoliberal model. Instead, the RBA slashed interest rates to the bone in order to squeeze every last drop of credit growth out of the system.

Where to now? We know that we have to re-embrace something more along the lines of Keynesianism at least. But this mob of fucksticks are too ideologically opposed and too corrupt and will happily let the economy burn instead.
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Re: Australian economy

Postby HBS Guy » 08 Jun 2017, 10:17

Yeah, the “fucksticks” must have realised that cutting penalty rates is going to hurt the Budget and economy big time—so they are phasing the cut in over 3 years! Too gutless to reverse their decision even tho they do realise it is the wrong one!
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Re: Australian economy

Postby HBS Guy » 08 Jun 2017, 12:24

Greg Jericho (Grogonomics:)

https://www.theguardian.com/business/commentisfree/2017/jun/08/we-need-to-talk-about-recession-why-the-record-run-of-growth-wont-pay-the-bills

If you do want to talk records, here’s one. In the past 18 quarters, Australia’s annual GDP growth has never been above 3% – the longest such run since the ABS began calculating quarterly GDP in 1959:


Our economy grinding along, unable to provide jobs to all who want one. On top of that, wage theft seems to be rampant (7/11 and many many others!)

In the past nine years there have only been four quarters where annual GDP growth has been above 3% – a growth rate that used to be considered merely average. And we can no longer find succour from comparing ourselves with the rest of the world.

Three months ago when talking up the GDP figures, Scott Morrison boasted that Australia’s economy was growing faster than any of the G7 nations. Well no longer.

Our growth now lags behind the UK, US and Canada and well back in the pack of all OECD nations:


Oh the Libs are such wonderful economic managers, NOT! FFS, Gillard/Swan made a lunatic (only word to describe it) attempt to reach a surplus only to stop when unemployment went up. The morons that make up the shambles on winning the 2013 election promptly—decided to go for a surplus! Thus the mess we have today!

The largest contributor in the March quarter was “change in inventories”. This is essentially companies building up their stocks. This was mostly done by the mining sector, which, as the treasurer noted, was largely due to their taking advantage of a spike in mineral prices by running down stock in December and thus in March they built them up again.

That’s not a bad sign but, as the treasurer also noted, it often cancels out the impact of exports – the volume of which actually fell in March:


So, exports not helping now. Nor are dwelling construction—an end to the housing boom seems to be in sight. Dwelling construction removed .2% from GDP growth.

The biggest driver of growth over the past year was household consumption. And while that is not unusual, the reasons highlight why we have such weak growth at the moment.

With real wages falling and the total number of hours worked growing by just 0.5% over the past year, it is somewhat surprising that household consumption continues to bolster GDP growth. But we are spending not because we are flush with cash but because we are eating into our savings.

The savings ratio is now back to levels not seen since the GFC hit. . .But despite the large drop in our savings rate since 2011, the growth rate of our spending has not risen – it remains at a historically low 2.4%. . . .

Essentially all the surge in nominal GDP is going to profits. Corporate gross operating surplus (as good proxy for profits) rose 20.1% in the past year – the best growth for eight years. But wages are not responding. . . .The big jump in profits is mostly going to the mining sector – a sector where employment is down 12% on where it was five years ago. Thus whereas during the mining boom years the big mining profits led to job growth and big wages that then filtered through the economy, that is not happening this time.

In fact real labour costs in the past year fell 6% – the biggest one-year fall in history:


Recession is what we are in. If dwelling construction continues to descrease, gawd ’elpus!
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Re: Australian economy

Postby Lefty » 09 Jun 2017, 01:31

Bilbo is worried.....Extremely worrying income shifts towards profits – a repeating destructive phenomenon

This is an extension of yesterday’s blog on the Australian national accounts release (Australian economy was slowing fast in March-quarter 2017 and outlook negative and delves further into the income side of the results, which are, frankly, stunning. They also accord with general global trends which I have written about in the past, which are creating further income inequality and damaging stable damaging growth prospects. Yesterday’s data confirmed that over the last two quarters (at least) almost all of the income growth has been captured by profits, with real wages and salaries actually falling in the March-quarter 2017. No wonder the growth in consumption spending fell away in the first part of 2017. Does that matter? Well, a rise in the profit share undermines consumption spending. If consumption spending is weak, the opportunities for profitable investment in new productive capital decline. Economies that are growing strongly provide a fertile environment for private investment. Austerity-ridden economies undermine private investment. Economies where consumption is falling due to real wage suppression also do not provide a buoyant investment climate.


Extrordinary! Almost all the income growth has started going to profits - this trend needs to reverse quickly or not only will millions of Australians become poorer, a high-consumption economy such as ours will become very much endangered as Australian households struggle to keep up with consuming capital's output of goods and services. And with the ability to replace wage growth with credit growth seemingly close to exhausted, the need for this to turn around is all the more pressing.

Earth to capital - business cannot expand and flourish if workers cannot afford to buy what you are producing.
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Re: Australian economy

Postby HBS Guy » 18 Jun 2017, 22:40

Abbott & Co are going to cause the mother and father of all recessions—be prepared!
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Re: Australian economy

Postby HBS Guy » 18 Jun 2017, 22:58

Abbott & Co are going to cause the mother and father of all recessions—be prepared!
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Re: Australian economy

Postby HBS Guy » 04 Jul 2017, 11:46

Since the board last met in June – when they pointedly downplayed what was described as a temporary slowdown in first-quarter growth – the labour market data has shattered expectations with the jobless rate falling to a four-year low of 5.5 per cent.

That is now just 0.5 of a percentage point above the technical threshold that the Reserve Bank regards as "full employment".

Any fall in the jobless rate below that level would lead to higher wages growth and an inflation pick-up that would likely trigger rate hikes, according to its internal models.

The RBA's latest data for household debt – which stood at the end of the March quarter at 190.4 per cent of annualised disposable incomes – confirms Australia has one of the developed world's highest private debt burdens, with a ratio that is almost 50 per cent higher than what the US saw ahead of the sub-prime crash in 2008.


http://www.afr.com/news/economy/record-debt-burden-raises-stakes-ahead-of-rba-meeting-20170703-gx3nra#ixzz4loxZdfXU

Nearly 200% debt to annual income. The 5.5% unemployment picture I strongly doubt is anywhere near accurate and in any case it is irrelevant considering the 10% or so underemployment we have. ABS jobs figures not that accurate and the higher trend figure would be used in any case. Any interest rate hike, especially a couple of them is going to withdraw a substantial amount of spending.

We must be very near a technical recession.
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Re: Australian economy

Postby HBS Guy » 04 Jul 2017, 11:46

Since the board last met in June – when they pointedly downplayed what was described as a temporary slowdown in first-quarter growth – the labour market data has shattered expectations with the jobless rate falling to a four-year low of 5.5 per cent.

That is now just 0.5 of a percentage point above the technical threshold that the Reserve Bank regards as "full employment".

Any fall in the jobless rate below that level would lead to higher wages growth and an inflation pick-up that would likely trigger rate hikes, according to its internal models.

The RBA's latest data for household debt – which stood at the end of the March quarter at 190.4 per cent of annualised disposable incomes – confirms Australia has one of the developed world's highest private debt burdens, with a ratio that is almost 50 per cent higher than what the US saw ahead of the sub-prime crash in 2008.


http://www.afr.com/news/economy/record-debt-burden-raises-stakes-ahead-of-rba-meeting-20170703-gx3nra#ixzz4loxZdfXU

Nearly 200% debt to annual income. The 5.5% unemployment picture I strongly doubt is anywhere near accurate and in any case it is irrelevant considering the 10% or so underemployment we have. ABS jobs figures not that accurate and the higher trend figure would be used in any case. Any interest rate hike, especially a couple of them is going to withdraw a substantial amount of spending.

We must be very near a technical recession.
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Re: Australian economy

Postby HBS Guy » 17 Jul 2017, 03:31

Abbott & Co are going to cause the mother and father of all recessions—be prepared!
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Re: Australian economy

Postby Lefty » 26 Jul 2017, 20:55

Guest post by CBA economist Gareth Aird at Macrobusiness

In a nutshell - and also noted by Bilbo - the current little economic spurt is being driven by a return to pre-GFC household behaviour, with household savings plunging back toward zero, after shooting back up closer to the very-long term average when the GFC struck.

This is a remarkable social experiment we are running - how high can we keep pushing household debt in order to keep fuelling the consumption economy? We're already far higher than any ever dreamed it could go and continuing to rise.
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Re: Australian economy

Postby HBS Guy » 02 Aug 2017, 10:51

Abbott & Co are going to cause the mother and father of all recessions—be prepared!
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Re: Australian economy

Postby Lefty » 02 Aug 2017, 11:51

HBS Guy wrote:Grim news regarding home ownership:

http://thenewdaily.com.au/money/your-budget/2017/08/02/hilda-survey-2017/


The neo-liberal dream writ large! Expand wealth and opportunity for those further up the ladder by depriving it from those further down - classic neo-liberal trickle up.

The rot had begun to set in by 1980 as egalitarianism and progressivity was progressively pushed aside by the notion of the self-maximising homo economicus. Regardless what the HILDA survey says about changes in the rate of inequality, growth in inequality of opportuity has been huge - as a 45 year old, I consider that we got the last of the truly affordable housing, home ownership is now an unrealizable dream for booming numbers of our young people.....while people my age and older often own more houses than we can live in.

This is where "there is no such thing as society" and "everyone for themselves, who cares what happens to anyone else" ends up.
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Re: Australian economy

Postby HBS Guy » 02 Aug 2017, 12:42

Yup. I will leave my estate to Milly. She can sell it if she likes—would love to think she will live there (and might (AGW)) but not going to rule her life from the grave! Be the only way likely she can afford a house.
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Re: Australian economy

Postby Lefty » 08 Aug 2017, 09:29

Haven't been all that well of late but this actually gave me my first laugh in a while :bgrin : http://www.theshovel.com.au/2017/08/07/government-calls-emergency-meeting-to-resolve-best-way-of-doing-nothing/

Hard to find a more accurate portrayal of this useless mob of pricks.
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Re: Australian economy

Postby HBS Guy » 08 Aug 2017, 09:37

ahahahaha!
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Re: Australian economy

Postby Lefty » 06 Sep 2017, 14:25

June quarter national accounts appear to have solved a mystery that has been gaining momentum much of this year. Wages growth has been flat to even negative, household credit has not been surging strongly, consumers are highly pessimistic......yet business have been reporting strong growth in conditions and confidence, with booming profits to boot.

With no wage growth and slow credit growth, how have households managed to keep spending so strongly? The answer appears to be - they haven't.

While households have been running their savings ratio back down toward zero in an attempt to keep up consumption, the real thing that stands out it that we now see how business have been making money hand over fist without workers actually having any more money to spend - there has been a large spike in public consumption and investment, mainly at the state and local government levels.

In fact, without this surge in government spending, today's GDP print would have been a big fat ZERO

The big puzzle that has emerged this year - how business conditions and copnfidence and consumer confidence can have diverged to such a remarkable extent - looks like it might have been sold.

The improvemnt seen in the economy this year has been underpinned by government stimulus.
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Re: Australian economy

Postby HBS Guy » 06 Sep 2017, 14:43

That and investors buying existing properties. And building of homeunits where formerly a house stood, at least in Adelaide. Don’t mind that even tho I would not like to live in one, saves a lot of urban sprawl.

This chart shows everything at a glance:

Image
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Re: Australian economy

Postby HBS Guy » 08 Sep 2017, 12:46

From smh of today:

Labor Treasury spokesman Chris Bowen said without government investment – driven largely by the new Royal Adelaide hospital – and government consumption, the growth number would have been flat.

"It's ironic that we have the Turnbull Government trying to whip up fear of socialism while it relies on public spending to prop up the June quarter growth figures."


http://www.smh.com.au/business/the-economy/australias-economy-grew-08-per-cent-in-june-quarter-20170906-gybpqu.html
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Re: Australian economy

Postby HBS Guy » 08 Sep 2017, 12:58

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Re: Australian economy

Postby HBS Guy » 12 Sep 2017, 10:55

The knife edge on which many small businesses sit has been highlighted by research that shows just 50.7 per cent had positive cash flow as of June 2017. It’s getting hard out there.


http://www.smh.com.au/small-business/finance/small-business-on-the-brink-with-only-half-recording-positive-cash-flow-20170911-gyeurw.html
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Re: Australian economy

Postby HBS Guy » 02 Oct 2017, 17:17

Woa!

Sydney house prices and auction clearance rates fell!

Sydney house prices fell in September for the first time in 17 months, in further evidence that the wind has gone out of the sails of the New South Wales capital’s property market.

In the first month of spring, property prices fell by 0.1 per cent in Australia’s most populous city, Core Logic revealed on Monday.

The last time capital gains on property dropped in Sydney was in February 2016.

The pronounced cooling was further reflected in Saturday’s auction clearance rate, which fell to 65.3 per cent in Sydney, according to Domain.

That was down from 70.2 per cent the week before, and 76.6 per cent on the equivalent Saturday in 2016.

By comparison the Melbourne property market continues to boom, with monthly capital gains of 0.9 per cent, and a clearance rate on Saturday of 79 per cent.

In real terms, however, Melbourne property prices are still far below Sydney’s.


http://thenewdaily.com.au/money/property/2017/10/02/sydney-house-prices-fall-september/
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Re: Australian economy

Postby HBS Guy » 04 Oct 2017, 09:01

The Kouk:

Retailers face tough Christmas

Business sentiment remains flat moving into the final quarter of 2017, despite an uptick in mid-year trading. In Dun & Bradstreet’s September Business Expectations Survey companies are predicting weaker sales, lower employment and a decline in selling prices; however, profits and capital investment are tipped to rise in the last months of the year. The upcoming Christmas period has done little to lift spirits in the troubled Retail sector, with expectations uncharacteristically low for the December quarter.

"As 2017 draws to a close, business expectations remain broadly steady, which points to ongoing moderate economic growth. Actual business activity ticked higher in the June quarter, but it remains in a range that points to the economy neither being strong nor weak, but rather something in between." Stephen Koukoulas, Dun & Bradstreet Economic Adviser


https://thekouk.com/item/542-retailers-face-a-tough-christmas.html

I don’t have a particularly high opinion of the Kouk’s ability as an economist, yet the stupid penalty rates decision means there is less ability to spend among people with the least amount of disposable income and the running up of the credit card bill/running down of savings has to come to a natural end sometime.

Merry Christmas
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Re: Australian economy

Postby greggerypeccary » 04 Oct 2017, 09:50

HBS Guy wrote:The Kouk:

Retailers face tough Christmas

Business sentiment remains flat moving into the final quarter of 2017, despite an uptick in mid-year trading. In Dun & Bradstreet’s September Business Expectations Survey companies are predicting weaker sales, lower employment and a decline in selling prices; however, profits and capital investment are tipped to rise in the last months of the year. The upcoming Christmas period has done little to lift spirits in the troubled Retail sector, with expectations uncharacteristically low for the December quarter.

"As 2017 draws to a close, business expectations remain broadly steady, which points to ongoing moderate economic growth. Actual business activity ticked higher in the June quarter, but it remains in a range that points to the economy neither being strong nor weak, but rather something in between." Stephen Koukoulas, Dun & Bradstreet Economic Adviser


https://thekouk.com/item/542-retailers-face-a-tough-christmas.html

I don’t have a particularly high opinion of the Kouk’s ability as an economist, yet the stupid penalty rates decision means there is less ability to spend among people with the least amount of disposable income and the running up of the credit card bill/running down of savings has to come to a natural end sometime.

Merry Christmas


Retail shops are closing left right and centre, here in the Perth CBD.

Plus, office space all around me is empty (and has been for years), and even coffee shops are closing down.

The online shopping revolution is slowly killing retail, and the ridiculously high rents are forcing the coffee shops etc. to close.

I can't see things getting any better in the near future.
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