The recession we don’t know we’re in

I’m keen to know your thoughts on the Reserve Bank’s call this week to keep rates on hold at 4.35 per cent.

I know what Aussie entrepreneur and podcast host Mark Bouris thinks, and it’s not good news for Australia. The Yellow Brick Road founder has boldly declared that our country is “definitely in a recession”, joining Ben Fordham on Sydney’s 2BG to share his frank analysis on what’s going on with our economy.

If you missed it, below is a bit of what Bouris said, keeping in mind his comments were made before the RBA realised its decision.

“On a per capita basis, we’ve been in recession for about 18 months,” Mr Bouris said.

“So if you (asked) what is the GDP growth numbers per capita of Australia, per head of persons; given that we’ve had nearly a million people come to the country over the last two years, we are definitely in a recession. I don’t know why they don’t look at that number – they just look at the overall number – but on a per capita, we are absolutely (in a recession). Which means our standard of living, Ben, is reducing. The standard of living per person in this country is lower than it was two years ago.”

Bouris went on to speak to fears of a recession in America, pointing towards a theory around unemployment figures.

“If, in a three-month period, you get a half a per cent variation in unemployment compared to the whole year’s lowest unemployment number – which is what’s happened in America – then we’re going to have a recession,” he said.

“So that is part of the big reaction (in the) United States…they’re basically saying there’s going to be a recession in the US, the Federal Reserve has gone too hard. Which is what our RBA has got to be careful of. I’ve been saying for a long time, our RBA has been going too hard for too long – give it a rest.”

The RBA, on Tuesday, continued to push its message around returning inflation to target as being the priority. Below is a portion of the Statement by the Reserve Bank Board: Monetary Policy Decision.

Inflation in underlying terms remains too high, and the latest projections show that it will be some time yet before inflation is sustainably in the target range. Data have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out. Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range.

Are you with Bouris in believing Australia’s entrenched in a recession? What I do know is that this latest rate hold, the sixth straight, offers welcome stability heading into the spring selling season for our buyers and sellers. 

Enjoy your weekend

Matt Lancashire