This month, the Albanon government broke three poverty records. economic management and a decline in living standards.
The first of these records concerns Australia’s real household disposable income, perhaps the single best measure of living standards.
The Australian Bureau of Statistics’ (ABS) latest national accounts show that real household disposable income suffered its biggest annual decline on record, plummeting 5.1% last financial year.
As a result, Australian households have foregone all of the increased income from the COVID-19 pandemic stimulus package.
Real disposable household income per capita in Australia has returned to levels observed in early 2019, when it was only slightly above 2010.
This means Australian households have endured 13 years of almost zero income growth.
AFR’s Michael Reid conducted an analysis of how Australia’s decline in real household disposable income per capita compares with the rest of the world, using OECD data.
Mr Reid said Australian households suffered the world’s biggest income collapse last year.
This collapse in household disposable income led to a 0.2% decline in real per capita household spending and a corresponding decline in the country’s economic growth.
The outcome would have been even worse had the household savings rate not fallen to its lowest level since the June 2008 quarter, spurring spending in the face of falling incomes.
Alex Joyner, Chief Economist at IFM Investors, presented the graph below, which tracks the household budget sub-factors from Westpac’s latest consumer sentiment survey compared to per capita household spending.
Household spending is clearly in a slump, and per capita household spending is expected to decline further as the per capita recession afflicting Australia continues.
The world’s worst rental crisis?
This marks the second record broken by the Albanon government this month.
Bloomberg released a report showing Australia has the lowest rental vacancy rate of any country in the country, with a vacancy rate of just 0.9%.
collapse of australia rental vacancy This rate follows the strongest net overseas migration and population growth in history, with the country’s population increasing by more than 600,000 people in the last financial year.
This rapid population growth, combined with a tight rental market, is driving rental inflation through the roof in Australia, which in turn is pushing up overall CPI inflation.
“Rent inflation is widespread as rental markets tighten across the country. Housing supply is not keeping up,” the RBA said in its latest Monetary Policy Statement (SoMP).
“Available rents have increased 30% since before the pandemic, far outpacing historical CPI rent increases.”
“Rent inflation is expected to continue for some time, with vacancy rates at historic lows and the tight rental market showing little sign of easing in the short term,” the RBA SoMP warned.
Australia’s inflation is ‘fixed’
finally, economist This month, the magazine ranked Australia No. 1 due to entrenched inflation, thanks in part to strong rent growth.
the economist The ‘entrenched’ inflation measure is based on an assessment of actual inflation and inflation expectations, and Australia ranks poorly on both counts.
More pain coming to Australian families
The outlook facing Australian households remains bleak, given that housing debt servicing costs were already at record highs before this month’s RBA rate hike.
The RBA’s increase in the official cash rate this month and further expiry of cheap fixed rate mortgages due to the pandemic will further increase debt service costs.
Meanwhile, the Reserve Bank of Australia’s SoMP predicts that Australia’s real wages are below pre-pandemic levels and will continue to be in the red.
Australians therefore face a long-term decline in living standards amid a deep per capita recession, falling real wages and incomes, rising mortgage payments and rents, and overburdened infrastructure and services. .
I have never seen the federal government destroy living standards so quickly. The main culprit is extreme levels of net overseas immigration that are crushing everything in sight, driving up inflation and the cost of living, and forcing the RBA to do more. Retaliate by raising interest rates.
If the Albanon government is serious about ending the country’s housing crisis and controlling inflation, it will moderate its policies. pure overseas migration We are operating below the country’s ability to provide housing and infrastructure, and we are not operating at record levels.
Leith van Onselen is co-founder of MacroBusiness.com.au and chief economist for MB Funds and MB Super. Mr Rees has previously worked at the Australian Treasury, the Victorian Treasury and Goldman Sachs.