Australia is about to be hit hard - Govt. in denial

So, to summarise;
We recognise tough times ahead.. yet the policy changes required to weather the storm are political death for any politician that implements them. Ergo, this train is going to keep going down its current track.

We know what the future holds, our sister exporting nations Brazil & Canada are already in recession... jeez... I mean, even cavemen accepted and prepared for winter. As a species have we really lost these basic survival instincts?
 
Here is a run of some economic news since the election. The starting point for comparisons is the September quarter 2013 for quarterly data and September 2013 for monthly data.

Since the election, private sector capital expenditure has fallen by a quite stunning 15%. This means that businesses have savagely cut their investment plans and undermined the growth momentum of the economy. The so-called investment expectations data from the Australian Bureau of Statistics suggests that business investment will fall by a further 20% in 2015-16. These are business investment outcomes usually seen during recessions.

At the same time, the national accounts revealed real GDP growth slowed to a paltry 2.0% in the year to the June quarter 2015. Growth is, at best tepid, at worst we are seeing a stagnation that is undermining incomes and living standards. Annual GDP growth has been below 3% for the term of the Abbott government and if anything, growth is slowing with quarterly GDP up just 0.2% in the June quarter.

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According to ABS data, company profits have fallen a sharp 6% since the election. This is despite the positive cash-flow effects of record low interest rates and the competitive boost from the lower Australian dollar which today slid below 70 US cents. Simply put, firms are struggling to maintain profits whilst the economy is weak, even though there are positive factors helping their bottom line.

What is also apparent is that the business sector has responded to these economic conditions by under-hiring workers and cracking down on pay rates.

The unemployment rate has jumped to a 13-year high of 6.3% and annual growth in wages, as measured by average weekly earnings, has slumped to 1.2% which is the lowest pace of wages growth in many decades. Wages growth is accordingly less than the rate of inflation, meaning that the purchasing power for the average household is falling. These labour market dynamics mean that the number of people unemployed has risen by 114,000 to more than 800,000, a 21-year high.
Amid these poor economic indicators, the government has increased the budget deficit by about $25bn a year from the level presented to it in the pre-election fiscal outlook in August 2013. A mix of additional spending, giving up the revenue from the carbon price, the bank levy and mining tax and weaker growth have all conspired to see the budget deficit increase. Gone is any discussion of a surplus until at least the 2020s and gross government debt has risen to a record $384bn, over $110bn higher than the level inherited by the Abbott government. Government debt will soon exceed $400bn, given treasurer Joe Hockey's inability to get government spending and the budget deficit under control.

Unemployment rate of 6.4% means it's time to spend money to create jobs
Stephen Koukoulas
Stephen Koukoulas Read more
Perhaps the most telling fact that smashes once and for all the economic management myth that surrounds the Coalition government is the weakness of the Australian stock market.

The recent market volatility has not hidden the fact that since election, the ASX200 is down about 4% (using Wednesday's level of about 5,050 points). This lame performance sits in stark contrast with other major global stock markets. Over the same time, the US S&P 500 and German DAX indices are both up by more than 15%, the Japanese Nikkei is up by about 25% while the UK FTSE has been weaker, dropping by about 5%.

The weak economy has clearly weighed on profits and therefore share prices.

www.theguardian.com/business/commentisfree/2015/sep/02/economic-management-is-now-tony-abbotts-weakest-claim-to-re-election
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SilverPete said:
Global slowdowns in growth, hints of an impending meltdown in markets due to fears over the Chinese economy, business confidence declining, inflation not picking up... and here in Australia all we get from politicians is bullshit, vote buying and blame games.

Our economy will be hit hard, but maybe it's the crash we have to have.
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Don't worry - it is different here. House prices will keep rising forever and we will become the wealthiest nation in the world.
 
I don't have the article in front of me, but the Future Fund has been cashing up. About 20% of its 160 billion I believe. They must also be anticipating a giant crash.
 
End of boom means end of jobs

The chart below shows the Aussie unemployment rate since then:

MM20150904a.jpg


Source: Bloomberg


Whatever the mainstream dopes say, the Aussie economy is in trouble. Business investment is falling, and during the last quarter, the Aussie economy grew at a slower rate than the Greek economy!

Daily Reckoning
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They're too shit scared to stay we are in a recession because it will put us in a worse position than we already are!
 
TheEnd said:
They're too shit scared to stay we are in a recession because it will put us they're chances of getting re-elected in a worse position than we already are!
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sammysilver said:
I don't have the article in front of me, but the Future Fund has been cashing up. About 20% of its 160 billion I believe. They must also be anticipating a giant crash.
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How do they plan to spend it? Investment? Or just keep governing until its all spent?
 
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