The head of Deloitte Access Economics, Pradeep Philip, gave one of the best summaries of Wednesday’s Q3 national accounts release from the Australian Bureau of Statistics (ABS), noting that the private sector was being “clobbered” and the economy was “stuck in the mud and spinning its wheels”.
“With little headroom for further fiscal stimulus and with the private economy clobbered, the case for a rate cut is strong”, he said.
“But with the Reserve Bank of Australia maintaining a hawkish outlook on inflation, a rate cut may well come later rather than sooner”.
CEO of the Australian Industry Group (AIG), Innes Willox, gave a similar assessment, noting that the private sector is in recession and shedding jobs.
“The data shows much of the private sector faces recession-like conditions. It is only a flood of government spending in recent months that is masking the true picture in the broader economy”, Willox said.
“It is clear the non-government sector of the economy, the private sector, is in contraction and you could then argue it is in recession”.
“There is a big transfer between the private sector and the public sector at the moment”.
“The private sector is shedding jobs to the public sector, which is picking up jobs. But are they the productive jobs we want?”.
“The real problem we have here for the economy is that the private sector, which is the engine room of the economy, is slowing quite dramatically”.
“An economy increasingly dependent on government spending in lower-productivity industries is simply not sustainable”, he said.
The Q3 national accounts, according to Coalition shadow treasurer Angus Taylor, demonstrated how the Albanese government had failed the public by relying solely on migrants and public handouts to sustain the economy, thereby increasing inflationary pressures.
“This outcome reflects the complete and utter failure of Labor’s big Australia, big government policies”, he said.
It is difficult to disagree with the above assessments.
The seven-quarter per capita recession is the longest on record, masked by unprecedented population growth.
Source: Alex joiner (IFM Investors)
The non-market (government-aligned) sector has driven all of Australia’s recent economic growth.
The non-market (government-aligned) sector has also driven almost all of Australia’s employment growth.
This pivot to the non-market sector has also depressed Australia’s labour productivity, which has fallen to late-2016 levels.
Australia’s labour productivity growth is also among the poorest in the developed world:
An economy that is overly reliant on high immigration and government spending to grow is not a sustainable economy.
So long as this economic model persists, Australian living standards will continue to flounder.
