And yet we have a mass of very smart people nodding and suggesting this needs to occur because we need to get inflation under control and, well, damn the consequences. We know the economy is about to slow and the Reserve Bank is predicting household incomes to drastically fall. It all highlights that we are in a very tough spot. In the 1990s it took nine quarters to get back above the pre-recession peak whereas currently we are looking at still being below the level we are now in two-and-a-half years’ time. The impact of “social assistance benefits” in 2020 is very clear: This was because the Morrison government realised that stimulus works to keep the economy going and it also did not want to subject possible LNP voters to poverty so it nearly doubled jobseeker (temporarily). Part of the drop is because household incomes actually surged during the pandemic. What it does forecast, however, is a big fall in the amount of income households are going to have at their disposal to either spend or (if they are lucky) save. Usually, I calculate it on a per capita basis, but the Reserve Bank doesn’t forecast that. Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup You can’t eat GDP, and while it might look nice on a spreadsheet that iron ore, gas and coal exports are helping lift “the economy”, given gas prices don’t really help unless you own a mine, I prefer focusing on households. Where a recession is predicted, according to the RBA, is in the measure that I have for a number of years now been using as a guide of economic health – real household disposable income. While that’s not a definitive sign of a recession, it is something in the past that has only occurred during recessions. Both have GDP growing below 2% for likely more than a year. Both organisations, however, are pessimistic about actual economic growth.
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