Is Australia Running into a Recession?

So these articles has got me thinking whether Australia is heading towards recession

http://www.msn.com/en-au/money/markets/australia-is-running-...

https://www.theaustralian.com.au/nation/coronavirus-australi...

It would be interesting to see the opinion of OzBargain economists

Poll Options expired

  • 752
    We are already in recession but it's not officially declared
  • 40
    We are definitely going into a recession with official announcement
  • 16
    We are never going into a recession

Comments

  • +25

    Categorically absolutely yes for much of the world, not just here, but to what extent is yet to be determined.

    • -5

      Australia housing prices will rise for ever and this bubble can last as long as our government lasts.

      Ps from someone who loves bubbles.

      • phhht !

        the sound of my share values deflating …

        • Keep cool and it will be the sound when they inflate (if they were quality stock).

  • +35

    It is an actual measurement of the economy, not if it is "officially declared" or not.

    A contracting economy is defined to be in recession if it contracts for two or more consecutive quarters.

    • One possibility is that there is a severe contraction that lasts one quarter but after that the economy expands, avoiding a recession but possibly with a smaller economy.

      Against that is that the downturn looks like it will start now and will continue into at least April, crossing the boundary of two quarters. Mind you the March contraction may not actually drive GDP stats negative.

    • +35

      I have no debt and don't even have a credit card. Rubbing it in people's faces isn't helpful. Different people have different situations.

      • +46

        Why shouldn’t I gloat. I’ve been prudent and disciplined.

        Our society was a ponzi scheme where success was based on who could load themselves up with debt the fastest. These idiots were rewarded with gleaming front page articles on news websites how they’re a millionaire at 20 when most of them didn’t do anything smart at all except find some bank dumb enough to load themselves up.

        Forgive me now if I now have a chuckle now at their expense.

        • +39

          There are many people in debt purely trying to survive/gain education/support others etc. Not everyone went off to buy frivolous luxury cars and boats.

          • +29

            @Hybroid: You can’t be serious.

            So now these people are innocent because they bought beyond their means. Oh sorry let’s forgive their debt then and we can add it to your credit card OK? Didn’t think so.

            This is same condescending group who shamed renters that the money they pay is “dead money” but now they’re victims that were forced to go to the bank and signed on the dotted line?

            A recession is needed to reset expectation on debt. It’s become ridiculous and this will make people more respectful to borrowing money.

            • +30

              @caramellokoala: Lol looks like we found the angry renter.

            • +16

              @caramellokoala: what about people that had to borrow for medical reasons? Hell, I'm only getting free treatment because I volunteered for a trial otherwise it would be costing me $4k a month just to live. Do you want to gloat over someone that couldn't get their treatment for free?

            • @caramellokoala: nailed it buddy

        • +25

          Seems like you have an axe to grind rather than talking about economic reality.

          Why shouldn’t I gloat. I’ve been prudent and disciplined.

          Being "prudent and disciplined" isn't some sort of a moral virtue. One could argue that they lived the high life funded by cheap debt whilst you were being a "prudent and disciplined" pleb. Hard to say who the winner is. This has nothing to do with economics, just more to do with how you want spend money.

          Our society was a ponzi scheme where success was based on who could load themselves up with debt the fastest.

          What do you define "success" as? You've just chosen to use weasel words like "success" because you can say success is anything.

          These idiots were rewarded with gleaming front page articles on news websites how they’re a millionaire at 20 when most of them didn’t do anything smart at all except find some bank dumb enough to load themselves up.

          Show me one front page article with a 20 year old millionaire at 20 because they took out a huge debt from a bank. I'll wait.

          The truth is that you're simply just wrong. The number of "20 year old millionaires" is next to zero, and of the very few that exist, they're mostly funded by equity, not debt. Startups of the type you're referring to are almost fully funded by equity, not debt.

          Forgive me now if I now have a chuckle now at their expense.

          Who is the "they" you are talking about? Care to define?

        • +5

          LOL 'at their expense'. I dont agree with your Ponzi scheme comment but it is at the expense of the majority largely the poor, the young, the less skilled and the retired.

          Less jobs, people not paying the bills, businesses going bust, less savings and money => less spending, less credit and less tax revenue => future taxes and levies and massive govt debt for the young to pay, and of course less money for future social services such as unemployment benefits, pensions and medicare.

          • @johno3456: Yes, but at least those that have had a good run will be dragged down to caramel's level. If those below have to pay a price, so be it.

        • +2

          You shouldn't gloat.

        • Soon we'll have -ive interest rates. The banks will pay us to take on even more debt. Use the interest to pay off the principle.

        • sorry life hasn't been kind to you

        • 'Our society was a ponzi scheme'

          wow - sounds like you really felt that you belonged here … Superman

          but if you don't remember, the planet Krypton exploded when you were a baby …

    • +13

      Why the hell would you wish people lose their jobs/house/family??

      • +22

        Because he is a saltedcaramellokoala

        • Sounds delicious tbh

      • -1

        Nice straw man. I said none of that.

        A majority will be OK. Including their jobs/house/family. It’s only the idiots who went headlong into debt without a buffer that will suffer.

    • +10

      Putting your somewhat distasteful glee at the misfortunes of others aside…

      Those people who have savings and and haven’t loaded up are in a great position to ride this out and pickup some distressed assets.

      This is just mind-numbingly incorrect.

      Unless your savings were all in cash, in which case you were already losing a tonne in possible investment returns, anything you had your savings in have also lost value.

      Hell, even if you had all your savings in cash, have a look at the performance of the AUD over the past few weeks and you've still lost.

      No one wins in a recession. That's the nature of a recession.

      • +2

        Oh the irony. Let me just address your points individually.

        Unless your savings were all in cash, in which case you were already losing a tonne in possible investment returns, anything you had your savings in have also lost value.

        I moved to cash from the share market after the Virus spread to Korea so i didn’t miss out on any investment returns or lose any on shares(long term investments)

        Hell, even if you had all your savings in cash, have a look at the performance of the AUD over the past few weeks and you've still lost.

        Why are you using foreign exchange to value cash. Am I based in the US? I reside in Aus my buying power is in AUD. perhaps tomorrow if woolies start asking for USD I’ll use your metric to value my cash otherwise this is just idiotic.

        No one wins in a recession. That's the nature of a recession.

        Every piece of investment literature says your wrong.

        • still early to celebrate but we are on the right track if this goes on uninterrupted for another 6 months. from a purely investment point of view fingers crossed, there always players wishing for property to go up and down for their personal gain.

        • +1

          I reside in Aus my buying power is in AUD. perhaps tomorrow if woolies start asking for USD I’ll use your metric to value my cash otherwise this is just idiotic

          It's also idiotic of you to presume that inflation will remain stable.

          • @Chandler: There's a reasonable argument to be made that we'll be entering a stage of protracted deflation during this recession.

            • @gyrex: Of course - hence my use of presume rather than assume… although that's potentially giving caramellokoala too much credit?

          • @Chandler: Also that everything will be fine because the products he buys in Australia are immune from fluctuations in overseas markets.

        • +6

          Every piece of investment literature says your wrong.

          Is it just me or does the confusion of "your" and "you're" immediately make me take someone far less seriously?

          • +2

            @p1 ama: It's not just you, I think it's a helpful universal indicator one can use for credible scepticism.

          • @p1 ama: This is just stupidity.

            You invalidate an opinion on a single error in spelling due to typing it out on a phone rather than its content?

            Good luck in life with that attitude.

        • +1

          "I moved to cash from the share market after the Virus spread to Korea so i didn’t miss out on any investment returns or lose any on shares(long term investments)"

          So you helped to crash the stock market and then gloated about how it will affect people in debt who aren't as fortunate as you. I bet you've hoarded toilet paper too.

          That's Boomer mentality right there - "Eff you, got mine."

        • +1

          'your wrong'

          that's my right - you're left …

      • +1

        ASX:BBOZ

    • +14

      Sorry, probably not going to happen that way.

      For all their talk about financial responsibility, the Liberals don't have the stones to let people sink of their own accord. I predict there to be all sorts of bailouts and interest free loans to all those who can't meet their oversized debts. It will be socializing the losses once again, and then they will use that as an excuse to sell off more public infrastructure because its 'the responsible thing to do' lol. Its a bad joke

      edit: I should clarify, the Liberals as lead by Scotty. If Dutton worms his way in then yeah heads will be rolling down the sidewalks

      • +1

        Hate to say it but you're right. The housing bubble is too big to fail, it will sink Australia if it does. Quantitative easing and other forms of liquidity (easy debt) money will not be in short supply to support bailouts and extended periods of no real inflation.

      • +2

        Dutton really is the man. Doesn't get enough credit. One could only hope he'd be the liberal leader at some point in the future.

        • Wow, really? Dutton scares me. He'd setup a policed state very quickly.

          • @mattyman: '[Dutton would] setup a policed state'

            of boofheads - he came from where I used to live in Brisbane - the Police State (of brown bags - and I'm not talking food delivery)

    • +8

      Hates people loaded up with debt because of their disdain for others.

      Proceeds to do the exact same thing.

      Projecting much?

      Recession sucks for everyone. I have investments and cash. I want that to go up, and it's currently going down. How is that a good thing? Talking to business owners a lot of them will struggle if not outright go bankrupt. That sucks for them. Your cash you mention below is similarly doing nothing and you are losing out on value. The only winners here are those with enough money that they don't care about money in the first place. Get your head out of your ass.

      • -3

        Where did I say I hated anyone?

        You’re clearly salty about you’re poor investment decisions. You should be readying your cash to be deployed into the market when it bottoms out in the next month or so.

        Though I suspect from your post you have minimal cash and are bag holder that held their shitty ETF or penny stock too long(hint don’t read Internet forums for advice on investments so you preserve capital)

        • +15

          Get off your righteous high horse. If you don't think this is seriously going to tank our economy for a long time you're not as smart as you think you are. A lot of people are not going to be okay. The casual work economy is pretty much stuffed. Small businesses are going to have a hard time going 3-4 months without customers buying anything. Entertainment is going to feel a massive pinch. What about all those workers from Holden that recently got laid off? Are they going to easily find jobs where few places are making money?

          We are in for a tough time and just because you have to the means to ride it out doesn't mean you should gloat over others who don't. And to answer your question, no I'm not salty. I have a reasonably stable essential services job. I'm just not some (profanity) who takes pleasure in other people's pain.

          • -6

            @lolz112: I didn’t even comment to you.

            Or are you using an alt?

            Shows your maturity level when you need to have multiple accounts on an Internet forum to re-affirm your shitty opinions.

            • +12

              @caramellokoala: No not really, it shows your maturity level when you can't fathom that other people can't join in discussion on a public forum.

          • @lolz112: 'and the horse you rode in on'

    • +6

      While it's all my own fault, I took a mortgage last year to buy basically the cheapest house I could. It's not luxury - I just needed somewhere to live and put my stuff. If you danced around me for the suffering that's coming to me because of my debt, I'd knock you out.

      • +4

        I think the vast majority of Australians would be be more than happy to hold him up whilst you lay several devastating blows into this creep. I was lucky enough to cash out of my investments last year, but unlike the OP, my sincere concerns are with the health and welfare of other Australians who aren't in this position or will fall into mortgage stress. I hope you'll be OK mate. True blue Aussies will be there for one another during the tough times ahead.

        • +5

          I don't think the world's gonna end. I forsee some pain for most and disaster for many too. I just disagree with that guy because he takes pleasure in what will be great suffering for a lot of people. Some people will have put themselves into a position wherein they'll think suicide is a reasonable option. That's nothing to cheer and celebrate, regardless of whose fault it is. Compassion is more important in difficult times.

          • +2

            @freakatronic: Completely agree mate. I still remember when I was a young kid in primary school during the '87 recession/depression and there was a beautiful little girl who was in my class and was tragically slaughtered by her father along with the rest of the family in a murder/suicide because he lost his job, investments tanked, lost the house and everything else. This mongrel seems to relish in this kind of outcome - an objectively immoral and a truly odious position to hold. It's not unreasonable to expect that outcomes such as this might occur should the economy run into the ground yet the OP seems to find this somehow amusing - gross. Anyway, sending you best wishes and good health for the months and years to come.

            • @gyrex: I don't recall the family slaughter you refer to but I do remember '87 (didn't affect me).

              A murder/suicide is a reflection of psychiatric problems. Nobody mentally sound hurts themselves.
              You mentioned money issues, it could have been infidelity, sickness, obesity or whatever.

              Preexisting mental problems caused the tragic crisis situation, not money.

              But going back on topic. All this "crisis" will fizzle out to normal in a few weeks, month and a half.
              The biggest scar will be to remember with embarrassment and sadness the panic buying, by Australians, we are all witnessing.

              • @LFO: Not everyone has the foresight to be looking toward the end of the crisis. As well embarrassment at themselves, distrust in their neighbours. One thing I haven't seen in a while is this level of racial animosity. I'm half Chinese so I go unnoticed these days, but hatred for anyone Chinese looking is on the rise. Foreign Chinese pour petrol on the smouldering hate by not only joining the panic buyers, but buying to resell. I think multiculturalism's many weaknesses are about to be thrown under a glaring spotlight.

              • +3

                @LFO:

                All this "crisis" will fizzle out to normal in a few weeks, month and a half.

                Mate, if you really think that you have one hell of a surprise coming.

                • +1

                  @trapper: Wishful thinking indeed.

                • @trapper: Let's review this in about two months.

              • -1

                @LFO: You probably don't recall it because we lived in more subdued times where the media didn't look to pounce on moribund stories in order to maximise profit; in other words, it wasn't in the news - along with the hundreds of others who committed suicide for similar reasons during that recession.

                "A murder/suicide is a reflection of psychiatric problems. Nobody mentally sound hurts themselves."

                I don't know what to make of this comment other than to say financial stress and not being able to provide for a family would cause significant distress to a man who feels a moral obligation to do so. I'd imagine that losing one's job, home, car/s and the trust of his family to provide for them would be a significant burden.

                "You mentioned money issues, it could have been infidelity, sickness, obesity or whatever."

                The fact that I knew the girl personally and my parents knew her parents might give me an insight into the cause, but sure, let's use your rational and blame causes which had nothing to do with it because postulation from someone who had no personal connection to the person or their family seems more logical - makes more . Men didn't commit suicide in those days for reasons which they do now - men of the 80's were built differently, were mentally tougher and felt a deep, personal, moral obligation to provide for their family and if they didn't, they were cast as a failure of a man - a terrible burden to carry.

                I'm not going to comment on the rest of your post because it's absolute nonsense.

                • +1

                  @gyrex:

                  I'm not going to comment on the rest of your post because it's absolute nonsense.

                  Excellent debating skills.
                  Not.

                  • +2

                    @LFO: I think @trapper sufficiently covered it. The fact you think this will be the shortest recession/depression in history is laughable.

                    • @gyrex: Shouldn't be better to wait and see rather than imagine?

                      I don't mock others. I express my opinion about a "crisis" that started with a pneumonia virus … 6 months ago the speech was about how well the Australian economy was going, how resilient, envy of the world if I recall correctly.
                      Then, BOOM, the end is near!

                      As I said, lets come back here in two months. Say end of May, early June then we will know for sure.
                      Because, you know, we will still be here …

                      • @LFO: I hope you're right and I'm wrong mate but I just can't see how we transition out of this in a few months like you're suggesting. I think we're looking at at least 12-18 months before we start to see prolonged economic growth. I really hope you're right.

                        • @gyrex: OK, time will tell.

                          Lets catch up later and evaluate then.

                          See you mate :-)

            • @gyrex: 'beautiful little girl who was in my class and was tragically slaughtered by her father'

              toxic males - lucky we have Dutton looking after us - did you see what I did there

  • +1

    Australians? No. Australia? yes, looks like we're heading that way. Should be a short-lived one though.

    • No pun intended?

      • SloMo's leading us straya …

        I could say leading a bunch of a$$hole$ - but I won't …

    • Original title was :

      Is Australian running into a recession

    • +2

      Should be a short-lived one though.

      I doubt it because this has been building since the 1980's.

      That's when Keating, the "greatest Treasurer Australia has ever had", started the current neoliberal economic regime which lowered wages and increased costs to most of the economy.

      That lead to the current disastrous economic decline where the Government is directly stimulating the economy instead of stopping the "severe damage" to use the ACCC's words.

      • +5

        That lead to the current disastrous economic decline

        Wait. Keating is responsible for the coronavirus?!!

        • +3

          Co-ordinated attack on capitalism. Whitlam invented it, Keating incubated it, Rudd released it on one of his China visits.

          • @AlexF: Priceless!!!!!!!

  • +10

    Yes. This is the recession we have to have. Unless we closed our borders in late January there was little chance of this virus being stopped before it spread throughout our communities. But problem is closing borders back then would have looked like a radical over reaction by a paranoid and xenophobic population. So we kept our borders open, and here we are.

    Qantas announced it's cutting 90% of international flights. Whether Qantas cut 90% in February, or in March, it makes little difference to the long term bottom line. But it makes a huge difference to the spread of the disease in our population. It's too late now.

    I hope everyone here stays healthy and safe.

    • I assumed they just didn't care or thought it was bluff…..why else would they not deny re-entry back into Australia?

    • Misses the point. We are a trading nation - closing our borders would have induced a recession then and there. The Aussie dollar is going down pecisely because our second biggest export industry - educating foreign students - has had to shut up shop and our biggest one - coal - has had a massive price crunch as China locked down.

      Bluntly, if there is an Asian recession than as a small open Asian economy there is one here.

      • Well, being in a recession would have been better than having the entire country infected and die off like flies from it which would have a greater impact….?

  • +9

    Nothing will change, rich will be reacher, poor will be poorer.

    • +24

      What are the rich reaching for?

    • Na, rich will be poorer too for a while. It's during the recovery that the rich get richer while the poor get poorer. As the boom widens, the poor start to get better off too. But about then is generally when the next recession begins …

      And so the cycle goes on.

      • an academic in Boston once told me 'the US economy regularly crashes and burns - then rises from the ashes like a phoenix'

        so there's your capitalist model for you - or Shiva (both creator and destroyer) if you're into India

  • +2

    It will be interesting to see what happens to the housing market.

    • +3

      Prices will drop up tp 50% . Interesting NO catastrophic YES.

      • +1

        ohhh. I was thinking of raising funds to buy cheap stocks (sorry koala), but I have family that really need cheap housing - that sounds much better. I hope you're right. (My apologies for the insensitivity to anybody wanting to leave the housing market.)

        • wooda/cooda/shooda sold my investment property for a lotta cash just before this s.hit the fan

          but I woulda paid a lotta CGT, my bank would have let me borrow less than current if I'd wanted to buy something else, and what else would I have done with the money (I'm not a fan of cash is king - having distaste for banks' derisory 0.15%pa interest on savings accounts when the sharemarket was increasing at 10-20%pa - and my shares are down the toilet at the mo' - uh oh, here we go - down the tubes … wheee, enjoy the ride - we live in 'interesting times' !

      • ^^^this. I've been sitting on the sidelines waiting to see the impact on house prices in my area. The thing is, if i can manage to keep my job during this depression (yes, its not going to be a rec, its a dep) then i can maybe score a house for my family at a reasonable price closer to x5 my salary. I live in hope

    • -4

      …maybe I'll be able to finally buy my own house! …at a mere $2000…..

      Or get a nicer car …maybe one of those expensive ones that will probably drop in price because no one will buy them because they're too expensive (except rich people) and now even less of a chance if jobs start chopping away….meaning less bank to save for said expensive car….. Finally be able to drive that W16 Bugatti….mmmmmmmm-mmmmmm-mmmmmmmmmmmmm!

      😜

    • +2

      Na - house prices are underpinned by the rate of household formation (new households gotta live somewhere). In australia that's mostly set by the rate of immigration over the past few years. We get most of our net new households that way - new households created by young Australians get roughly counterbalanced by old households going to nursing homes or the funeral parlour.

      • +1

        This is it. Every government knows this, if they stop immigration then house prices crash. And politicians left, centre and right don’t want housing collapse because, well, most of them own more than one property.

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