Independent economist Tarric Brooker has published a terrific article illustrating how the federal government’s record immigration program is hiding the longest household recession on record.
Brooker notes that “in terms of GDP per capita, the nation is currently enduring its longest recession since records began, experiencing eight consecutive quarters of contracting per person economic outcomes”.
He also warns that “there is no end in sight for the weakness of the economy at a per person level”.
The severity of the recession on Australian households is evidenced by the record decline in real per capita household disposable income.
Brooker notes that since modern records began in the 1970s, “there have been three major declines in inflation adjusted per capita household disposable incomes during recessions, 1974-75, 1981-1983 and 1990-1991”.
“During those recessions, the largest prior decline in this metric occurred from 1981 to 1983, where it fell by 5%”.
By comparison, this episode has seen real per capita household disposable income fall by 9.9%, notes Brooker.
The fall in household disposable incomes is also reflected in real wages, which have plunged “4.9% from their pre pandemic level”.
“This leaves real wages roughly where they were in the September quarter of 2010, shedding over 13 years’ worth of collective gains”, notes Brooker.
As a result, Brooker argues that Australian households are experiencing the sharpest decline in living standards in at least half a century:
“When it comes to metrics that are defined by the performance of the economy at an individual household level, some have seen a decline in living standards (as measured by real household disposable income per capita) worse than every recession in the last 50 years”.
I will add that the decade-average growth in real per capita household disposable incomes now stands at only 0.03%, which is the poorest result in more than 60 years of records:
This decade is shaping up as another ‘lost decade’ for Australians.
