Five things the national accounts tell us about the economy
By Millie Muroi
The latest economic data paints a portrait of a country creaking under cost-of-living pressures and high interest rates. The Australian economy is crawling – grinding backwards on an individual level – and households are filling their trolleys with less, yet saving less, too.
The national accounts released by the Australian Bureau of Statistics on Wednesday for the June quarter reveal how the economy is tracking. Here’s what you need to know in five charts.
The Australian economy is barely staying afloat
The economy has been crawling along at a snail’s pace. And the Reserve Bank has its foot on the brakes. The Australian economy has been growing at closer to 0 per cent than 1 per cent every quarter in the year to June, and has slowed more, or by the same pace, each quarter since December 2022 as higher interest rates have squeezed households and businesses.
Population growth and government spending have kept the economy from slipping into negative territory. Government spending rose 1.4 per cent, with federal payments to households leading the charge. Education-related travel services and spending by international students helped prop up Australia’s exports, while population growth more broadly led to stronger demand and spending across the economy.
Economic growth per person continues to tumble
Despite the economy as a whole keeping its head above the water, Australians have been going backwards at an individual level for six consecutive quarters. This matters because it means consumers and businesses have been bringing in less income, producing less and spending less for the year-and-a-half to June.
Excluding the six consecutive quarters of decline since 2023, the last time economic growth per person dropped for two consecutive quarters (constituting a recession in per-person terms) was during COVID lockdowns when swaths of businesses shut shop, people stayed at home and the economy at large shrank along with it.
Households are still slashing spending ... even on essentials
As cost-of-living pressures and interest rates have continued to squeeze households, Australians have been tightening their belts. While some of these spending cuts suggest households have been trimming fat from “nice-to-have” categories such as eating out and alcohol, other cuts were in necessary items such as food.
Younger Australians in particular have been whittling down their spending, while older, more affluent demographics have continued to splash their cash.
Households aren’t stowing away their cash
Despite slashing their spending, households aren’t seeing their savings stack up. The household saving-to-income ratio compares the amount people are saving to the amount they are earning, with lower values indicating people are saving less of what they earn.
The ratio has been sitting at 0.6 for six months, which is the lowest it has been – except for the September 2023 quarter – since the global financial crisis. Of the income households have been bringing home, most of it is being spent, and very little stowed away for a rainy day.
Some states are feeling the crunch more than their neighbours
Economic growth has been bumpy across the economy. In the June quarter, all states and territories, except NSW, saw state final demand (demand for goods and services within the state) step up. The measure doesn’t include international and interstate trade, but gives an idea of how much households, businesses and government in each state are spending and producing.
Western Australia and South Australia experienced the strongest growth in state final demand as Western Australian households spent more on utilities, household equipment and recreation, and South Australia got a boost from government spending. Meanwhile, state final demand slipped into reverse for NSW (down 0.4 per cent) as households cut spending on hotels, cafes, restaurants, transport services and vehicle purchases.
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