Australian Households Endure Prolonged Recession: A Financial Overview

1

The economic downturn has been marked by an 8% decrease in real per capita household consumption from its peak in mid-2022. This regression in spending power follows a more pronounced decline in household incomes. Comparative data from the OECD also positions Australian households as experiencing the most significant consumption downturn amongst advanced economies since Q4 2019.

The downturn persists despite the introduction of the Stage 3 tax cuts on 1 July 2024 and the Reserve Bank of Australia's (RBA) February 0.25% interest rate reduction. These measures were anticipated to invigorate consumer demand, but recent retail sales figures from the ABS for February indicate otherwise. Retails sales, although having seen growth at the end of 2024, have now decelerated and are marginally below November 2022 levels.

Alex Joiner from IFM Investors highlights this decline, noting February saw a drop in nominal retail sales per capita following ten months of growth. The Commonwealth Bank of Australia (CBA) reflects on this cautious consumer behavior, pointing out that, while households have greater spending capacity due to tax cuts and increasing real incomes, spending remains selective, often hinging on sales and discounts events, and tends towards savings.

These recent sales figures reinforce the perspective that current interest rates may be overly restrictive. The prevailing economic sentiment indicates that while the RBA maintained a pause on interest rates, economists widely predict a rate cut anticipated in mid-May, contingent on the Q1 Consumer Price Index (CPI) results due later this month.

Published:Wednesday, 2nd Apr 2025
Source: Paige Estritori

Share this news item:

Finance News

Clear

Australian Dollar Faces Turbulence Amidst Global Tariff Developments 03 Apr 2025: Paige Estritori The Australian dollar experienced a dramatic day after the announcement of reciprocal tariffs and a baseline 10% tariff applied universally. While the DXY, a measure of the US dollar's performance, saw a decline, the AUD experienced significant volatility. Initial gains were quickly reversed, following the broader turmoil in global markets. - read more

Stagnant Wages Hamper Homeownership for Young Australians 02 Apr 2025: Paige Estritori Per Capita, a progressive think tank, has released a report highlighting the challenges faced by young Australians due to stagnant wage growth over the past decade. This economic stagnation has contributed significantly to declining homeownership rates among the youth. - read more

Australian Households Endure Prolonged Recession: A Financial Overview 02 Apr 2025: Paige Estritori Australian households are experiencing a prolonged economic recession, as per the Australian Bureau of Statistics (ABS) Q4 2024 national accounts. Real per capita household consumption has declined for eight consecutive quarters, illustrating a stagnant trend in consumer spending. - read more

Talaria Partners with Equity Trustees for Global Fund Oversight 01 Apr 2025: Paige Estritori Talaria Asset Management, a boutique investment firm based in Australia, has selected Equity Trustees as the responsible entity for its suite of three global equity funds. The decision encompasses the Talaria Global Equity Fund Complex ETF (TLRA), the Currency Hedged Complex ETF (TLRH), and the Foundation units. This partnership entrusts Equity Trustees with the responsibility of ensuring these funds meet necessary regulatory and compliance standards. - read more

Australian Inflation Eases, Indicating RBA Rate Cuts May Follow 01 Apr 2025: Paige Estritori Recent data reveals a continued decline in Australian inflation, providing optimism for the financial sector. The Australian Bureau of Statistics (ABS) and the Melbourne Institute (MI) both reported lower-than-expected inflation rates, with the MI’s trimmed mean inflation reaching its lowest since 2020. This trend, highlighted by Justin Fabo of Antipodean Macro, indicates a return towards pre-2003 averages. - read more

Powerful Advice Platforms Set to Redefine Australian Financial Planning 28 Mar 2025: Paige Estritori Advice platforms are emerging as a transformative force in Australia's financial planning sector, according to insights shared at the Financial Newswire’s Advice, Wealth and Super: Rewired 2025 Conference. Industry leaders predict these platforms will leverage their substantial scale and purchasing power to secure better pricing from fund managers, reshaping the landscape of financial services. - read more

Sydney Beer Co's Financial Collapse Leaves $10 Million Debt 28 Mar 2025: Paige Estritori Brett Lee's Sydney Beer Co, co-owned with Matt Nable, faces financial turmoil, owing nearly $10 million to over 60 creditors. Even the Australian Taxation Office and the McGrath Foundation, founded by Lee's cricket teammate Glenn McGrath, are on the list of those affected. The company appointed RSM Australia as administrators following unsuccessful expansion efforts into the US just six months after raising $6 million. - read more

Cost of Financial Advice and Client Retention Challenges Revealed 27 Mar 2025: Paige Estritori Recent findings by Netwealth indicate that the cost of financial advisory services is a significant factor for nearly half of clients discontinuing their adviser relationships. Specifically, 43% of former advised clients cite high costs as a primary concern, especially when they perceive inadequate value for complex financial situations. - read more

Monthly CPI Falls Short Again as Key Components Decline 26 Mar 2025: Paige Estritori A recent release by the Australian Bureau of Statistics (ABS) indicates that the monthly Consumer Price Index (CPI) is underwhelming expectations once more. The seasonally adjusted CPI increased by 2.4%, while the CPI excluding volatile items like holiday travel posted a 2.7% rise. Similarly, the annual trimmed mean registered a 2.7% uptick. - read more