Australia “Almost Certainly” In Recession In 2011, Economists Warn

13 Jun

From the Sunday Telegraph (sorry, no link), Finance Writer Nick Gardner dares to say the unspeakable:

Rates To Trigger Recession

Australia is on the verge of a recession.

Economists warn the economy will almost certainly be in recession later in the year as the Reserve Bank raises rates to avoid excessive inflation.

The forecast comes as most of the domestic economy continues to shrink in the face of weak consumer spending and a record-breaking strong dollar.

The economy contracted by 1.2 per cent in the March quarter, exaggerated by damage to our iron ore and coal exports because of natural disasters. And last week the ABS released jobs data showing the economy has lost 80,000 full-time jobs in the past two months. However, we are likely to skirt a recession this month.

“Miners are now having to work double time to fill not only the orders they would normally be catering for this quarter but also the coal they did not deliver in the previous three months because of the weather disruption,” said Steve Keen, professor of economics at the University of Western Sydney.

“That is likely to produce a pronounced bounce in the volumes this quarter, so we’ll probably have mildly positive growth by the end of June.

“However, after those orders have been filled, we’ll be back to our normal levels of exports and that’s when I think we will hit the skids and our growth will turn negative again for the last six months of the year.”

Shane Oliver, chief economist at AMP Capital, agrees.

“It’s later in the year we have to worry, especially if the RBA raises rates. It risks bringing the entire economy outside of resources to a standstill.”

The Australian Industry Group said the manufacturing, construction, and services sectors all shrank in May. Its indices, where 50 indicates an expanding sector and below 50 a contracting sector, showed manufacturing reached 47.7, services hit 49.9, and construction hit 39.6 – its 12th straight month of contraction.

In the lead up to the recent May budget, Treasurer Wayne “Goose” Swan was loudly propagandising that the coming budget would be all about “jobs jobs jobs”.  Indeed, he claimed that Labor has “created 750,000 jobs” since coming to power. No proof, of course. And noone in the lamestream media asked for any either.  Or bothered to try and check if Wayne’s claim was true.

We debunked that claim here … using his own budget documents.

Wayne also claimed that the Green-Labor government will create “half a million more” “in the next two years”.

We debunked that claim here … using his own budget documents.

Now, according to the ABS, we learn that “the economy lost 80,000 full-time jobs in the very same two month period that he was loudly parrotting his BS, unchecked by the media and “expert” commentators.

Off to another brilliant start on that “half a million more” jobs pledge, aren’t you Wayne.

"Goose" talking jobs jobs jobs

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6 Responses to “Australia “Almost Certainly” In Recession In 2011, Economists Warn”

  1. TP June 26, 2011 at 6:34 pm #

    I believe first thing Employer need to think about it Job Security. On other hand Employees need to show loyalties to them. issue is Mgmt/Managers only care about their bonus/commissions and hence no job security. This is pretty much core issue. If this is resolved, construction, retail etc etc will come back to Normal. Provided, Cost of living is reasonable. there is control on property market (Sale / Rent) of Government.

    • William J July 2, 2011 at 2:59 am #

      TP is out of touch as much as Wayne “Goose” Swan. What bloody planet are you from TP, I suggest its not Australia as you have no understanding of indices or how the Australian economy works.

      Australia has without doubt hit the skids, it has nothing to do with bosses and commissions – what a load of BS ! – sounds like a wimpy cry for praise and a pat on the back to me. (Not the Australian way !).

      What has really happened in Australia is – the people have lost confidence, confidence in the government is non existent. (any wonder, look at Julia Gillard and Wayne Swan – A Prime Minister that talks like Forest Gump and a Treasurer thats not sure if he has a full or empty box of chocolates).

      If Australia have no confidence in the government, employers stop employing, the people stop spending, prices increase to make up for reduced turnover (and rarely goes back to the original price).

      Its a shame Gillard & Swan dont share the same success as Forrest Gump

  2. Derek July 9, 2011 at 8:34 pm #

    My wife and I are in the retail sector. Our business is booming. Am I missing something?

  3. Marc September 25, 2011 at 9:58 am #

    Well said William, I thought that perhaps it was only me that does not like the way Gillard speaks. As for the ‘carbon tax’, what a joke. It looks just like the mining tax hiding under a burka. The very idea that a tax can somehow make the world a cleaner place is an insult to voters intelligence.

    Marc

    • AnOrdinaryABC May 17, 2013 at 3:41 pm #

      If want to know, the carbon tax purpose is to REDUCE carbon emissions in the present and the future. It has actually reduced carbon emissions, but not a very dramatic drop. I’m sure the average person understands this right?

  4. Sue - That Summer Goes Down November 30, 2011 at 8:44 pm #

    Read more about that falling feeling.

    http://www.theage.com.au/business/home-price-falls-accelerate-20111130-1o5wx.html?comments=184#comments

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