Money Minute – June 8 2017 “Flat, Not Fizzy”
Ross Greenwood: Morning to you Lisa, Karl, everybody.
Listen, our economic growth numbers yesterday we’re better than some expected.
The truth is, they’re pretty soft.
They showed 0.3 percent growth in the first quarter, that’s 1.7 percent annually.
The long-term average, you can say, is 3 percent.
So, we’re not in recession – not likely to be anytime soon – but the economy right now is not growing fast enough to create enough jobs, confidence, or revenue to turn around the federal budget.
But it’s what’s happening inside families, inside your home, that I find most curious.
I told you before the level of underemployment Australia is rising, you can see it here – though the overall level of unemployment is flat, so people have jobs but, either through choice or circumstances, they’re not working as many hours.
But because of technology and that surplus of workers, it means bosses are not under any pressure to push up wages.
So as we’ve explained, private sector wages are growing at just 1.8 percent, that’s less than inflation.
Public service wage is growing 2.4 percent.
So while wages growth is slow, so too are prices, average supermarket pricing, for example, have fallen for each of the last four years.
The price of cars, the same as it was 20 years ago…
But its other costs that you can’t avoid that are rising faster than your wages.
School fees, insurance, especially health insurance, gas, water, electricity, things you can’t avoid –
So what do families do?
How to start saving money
Well, for one they start saving less money and that was very apparent in the national account numbers compared with four years ago.
Australian households are saving half the amount of money they were then.
Now, to be fair, we’re still saving but this tells you that families are dipping into savings, or indeed going into debt, to maintain their lifestyles because of those other pressures.
Families, remember, account for half of the nation’s tax collected through their pay-as-you-go system.
So, families are cutting their spending and not getting pay rises – that equals a slower-moving economy as well.
Overnight, the Dow Jones up 37 points. The dollar 75.5 US cents.