Recession Coming Soon?

Trying2SaveABuck on 16/06/2019 - 23:00
Last edited 16/06/2019 - 23:00

Seemed like we needed a forum on this since so many people are mentioning it so here we go…

Australians have experienced almost 30 straight years of growth, unprecedented in any first world country. I am 29 years old and they tell me the last people to live thought an economic down would be around 46 years old….
So I’m putting it out there, in the next 12-24 months will Australia undergo a recession what do people think?

In the words of Paul Keiting this is probably the "the recession we had to have"

And if you do believe there is going to be a recession are you worried? Are you scared for the country? Scared for Your job? and why do you think that way?

Poll Options

  • 80
    Yes - I believed there will be a recession within the next 24 months
  • 25
    No - We will pull though Australian economy is stronger then you think
Financial

Comments

  • Diji1 on 16/06/2019 - 23:12
    +24

    Australians have experienced almost 30 straight years of growth

    The economy is not "Australians" and GDP growth has nothing at all to do with how individuals are living.

    This neoliberal talking point language masks the reality the median income has been falling for over 30 years and in 2017 it stood at $44,000 while the brainwashed population watches the news celebrating corporate profits.

    • loropy9 on 17/06/2019 - 00:02
      +2

      Looks like a neoliberal corporate profiteer just negged you…

    • tsunamisurfer on 17/06/2019 - 00:08
      +4

      Do you have some verifiable statistics that backs up your $44k figure?

      I found some random stats from this random site called ABS that says you are incorrect.

      • mskeggs on 17/06/2019 - 06:39
        +3

        Circa $44k is likely to be earnings per capita (it bounces around a lot), which is averaged over everybody who works, including part time, and maybe median rather than the mean.
        It is, however, a much better indication of how much money people have than the $80k p.a. full time wages often mentioned when comparing incomes, in my opinion. This is because full time wage earners are a minority, and paints a rosier picture than the per person average.

        Of course, it doesn’t matter which measure you use if it is the trend you are interested in, and wage income growth in Australia has been very low in real terms for a decade. You will have seen headlines about a “per capita” recession, because for the last 3 quarters earnings have fallen.

        • Kangal on 17/06/2019 - 09:08

          No, I remember that figure was between full-time equivalent workers, and it was almost half of what the average was. There's just a shipton of people who are getting paid minimum wage, and more bosses willing to hire more people at the base wage but not look at raises. Of course, this isn't the fault of managers everywhere but there seems to be some correlation going on. Still, this figure didn't stop politicians from both sides using the average to either ask for tax rises or more spending.

          It's true that the people at the top are quite removed from the realities of normalcy.

          • Trying2SaveABuck on 17/06/2019 - 12:53

            @Kangal: I dont agree with the original comment per-capita is not always the best measure because you cant expect the refugee family with 5-6 kids that migrated to Australia and have been milking the Welfare system for 4 years to do anything but drag down the average….

            But i agree the MPs are out of touch what it is like for the rest of us

  • askme69 on 17/06/2019 - 00:01
    -2

    It will continue if you want Sydney to be a suburb of CHINA. That's the only way to keep the HOUSE prices (BUBBLE, PONZI) inflated, is through immigration.

    I bet if the LIBS went into the election saying, we will keep your house prices high, but the CHINESE NAVY ships arriving next week, will be a permanent fixture.

    or we can deflate the market, yes it will hurt but we will survive and your children will thankyou in the long run.

    How would it have turned out?

    • loropy9 on 17/06/2019 - 00:06

      I see the logic in your scenario, with my children thanking me and all, but what if my children were CHINESE? Will they still thank me in the long run?

      • askme69 on 17/06/2019 - 00:23
        -1

        That's the other issue. Foreign ownership laws.

    • EightImmortals on 17/06/2019 - 07:10
      +2

      Actually real estate is pretty much unique in that's it's primary price driver is not supply and demand like other markets. Rather RE prices seem to be determined by credit supply. When credit is loose the prices go up and when it tightens up as it is ATM, prices go down. Might sound obvious but then if you consider that normal supply/demand forces kind of have a life of their own, credit is controlled by banks or whoever sets policy.

      The other issue, as a couple of other people have alluded to is that there is no means to stimulate the economy after the next recession. In Keating's recession interest rates were around 19% so when they wanted to get things moving again they could just drop the rates. Now that interest rates are around 1.5% ish they can't use that as a stimulus. Gonna be an interesting couple of years. OR, they could just keep printing money for the forseeable future and really drag things out for as long as they possibly can. I'm not sure anyone has any idea about the timing of the next big crash, except for maybe those pulling the strings but all the global dominoes keep lining up that something bad has to happen at some point. GL to all, reduce debt and have some cash in the bank and hope the bail-in laws that they snuck though last year don;t have too much of an impact on your savings/investments.

    • [Deactivated] on 21/06/2019 - 17:03

      Ponzi or a bubble, which one? If you're going to throw around terms, at least know what you are talking about.

  • tsunamisurfer on 17/06/2019 - 00:10
    +6

    We have virtually lost the ability to use monetary policy to stimulate or contract the economy, yes we are in danger.

  • askme69 on 17/06/2019 - 00:25

    While other countries have been raising interest rates in preparation for this. We have done SFA and now we have nowhere to go.

    We are doomed, unless (more than likely), the government will socialise the debt and let all the speculators off the hook.

  • try2bhelpful on 17/06/2019 - 00:47
    +2

    We survived the last GFC due to our mining boom and the ALP government stimulating the economy. We don’t have a mining boom anymore, lots of people are in debt, and the Libs have ruled out a stimulus package. Don’t know when the crash is coming but we will be hit this time. I stick to blue ribbon stocks, own my house outright, have money in the bank and super. I hope to ride out what happens, but who knows.

    • theHMASfriendship on 17/06/2019 - 00:55

      Coal is going swimmingly tho

      • try2bhelpful on 17/06/2019 - 01:33

        Hmmm, I wouldn’t bet my house on coal stocks.

    • EightImmortals on 17/06/2019 - 07:12
      -1

      Well done, not many are fortunate enough to be in your position. On a subjective note I have noticed that small cap stocks tend to do better in recession types scenarios than blue chips, but the blue chips will come back eventually. People with cash should watch for buying opportunities. LIC's should do OK as well I suspect.

      • try2bhelpful on 18/06/2019 - 07:12

        Yup, I have been very lucky, and I acknowledge that. I will, certainly, be looking for well priced stocks if it all hits the wall.

  • HardQuiz on 17/06/2019 - 05:28
    +3

    Paul Keiting

    Paul Keating ?

  • mskeggs on 17/06/2019 - 06:55
    +13

    I can guarantee a recession is coming at some point, but when talking about “doom” remember that economics is a long way from real life.
    If all of our incomes fell by 4% right now, it would be the most severe recession since the Great Depression, yet most people would not describe that as “doom”.
    The depression sucked for the quarter of people unemployed, and was no picnic for most of the rest, but any economic downside we face these days is likely to be much, much less severe.
    The kind of economic impact a bad recession will have are things like:
    - you have to sell your investment property, and maybe make a loss
    - you have to send the kids to public school
    - you have to drop private health insurance
    - you have to drink the Nescafé work supplies for free and take a sandwich from home.
    - your next car will have to be bought with savings not credit/lease (and it won’t be German)

    Some people here will feel very upset because they see themselves as entitled to these things, but it really isn’t doom. Of course, there are already people doing it truly tough, and there will be more of them in a recession, but as a country we haven’t prioritised looking after the less fortunate for many years, so I don’t see that changing.

    If you want much less anxiety about these sorts of things, pay down your debts, live more modestly and enjoy old fashioned things like a picnic, or the library or the local beach instead of the play centre, the restaurant or Kuta.

    It will be ok, and might even end up being a good thing.

    • Donaldhump on 17/06/2019 - 07:09
      +1

      Now I’m paranoid that offices will cut out the free Nescafé.

      • mskeggs on 17/06/2019 - 07:16
        +1

        They might cut back to international dust if things get really bad.

    • EightImmortals on 17/06/2019 - 07:19

      Good advice, except the free nescafe, I'll jump before I drink that stuff. :)
      But I suspect the next recession will be much greater than the depression the main reason being that it will be a global one whereas the depression was 'mainly' constrained to the U.S. Dire indicators are coming in from all over the world and not just one or two countries. If it does get as bad as some predict then it could get scary. During the last depression most Aussies lived in the sticks and new how to feed themselves. These days most people live in the cities and wouldn't have a clue in that regard so if food supplies dry up (we have very little fuel reserves ATM, way below what is mandated so if the trucks stop then so does the food supply, for the most part)it could get messy. Maybe that's an extreme scenario, I don't think things will get that bad but it's not impossible either. May we live in interesting times.

      • mskeggs on 17/06/2019 - 07:34
        +2

        I talked about life in the depression with my grandparents when they were alive.
        In rural Queensland it didn’t look a whole lot different to other times, they were dirt poor with not much in the way of possessions, but rent and food was cheap.
        In Sydney, people did struggle to get enough to eat, and bread lines were a thing. One family business basically ground to a halt so that even though they weren’t technically unemployed, there was no income.
        A lot of people were behind on the rent, but didn’t get evicted because the landlord preferred a tenant who paid sometimes over an empty building as there was a lot of vacant homes.
        The doctor would treat a sick person and let them pay when they could.
        Power & water bills went unpaid, but the government didn’t cut off service generally.
        There was a couple of pennies to send the kids to the pictures on a Saturday afternoon once in a while, they had to walk, not catch the tram (or actually sneak onto the tram while the conductor turned a blind eye).

        Down at La Perouse there was a big camp of homeless including families, but it was still a very small percentage.

        Things were worse in America, of course, because they hate the poor, but the depression was very much global.

    • Trying2SaveABuck on 17/06/2019 - 12:54

      Honestly other then buying a coffee before work i dont have the ability to cut on any of the above mentioned items….

      no investment properties et al here!

    • canyoudoitcheaper on 17/06/2019 - 20:21
      +5

      I think that’s a very rose tinted view of what impact a ‘bad recession’ would have. You only have to see what happened in USA in the GFC:
      - mass redundancies
      - large institutions going bankrupt or being bailed out
      - droves of families having their homes foreclosed and living in tents
      - unemployment doubling/ tripling

      The Nescafe is the last thing you’d be worried if you’ve been laid off, can’t pay the mortgage and have two kids. I think its a bit disingenuous to blame recession ‘anxiety’ on deprival of luxury goods.

  • TheMindsetTraveller on 17/06/2019 - 07:12
    +7

    The recession is here believe it or not.

    • vinni9284 on 17/06/2019 - 09:43

      +1

      When the RBA dropped the interest rates to 1.25% is a good sign of it.
      Whether that banks passed it on is another story

      • TheMindsetTraveller on 17/06/2019 - 10:26

        And they are thinking of doing at least another (maybe two) interest rate cuts in the near future.

        Sure this isn't the be all and end all of proof of a recession but in the big cities, things are slowing down and I am sure in the regional areas things have literally stopped a while ago.

        • vinni9284 on 17/06/2019 - 10:32

          The Pollies dare not say the "R" word as many ppl will hold on to their cash and not spend. Which can exacerbate the current recession we are in.

    • iseenya on 17/06/2019 - 13:34

      Here in WA, I've thought we were in a recession for about two years now, just going by the empty shops and commercial premises that I notice around Perth city and suburbs. With home prices now down ~20% (worse in country areas and much worse in some resources-dependent towns), I think the unhappy reality is finally starting to sink in for most residents.

  • suti on 17/06/2019 - 08:04
    +2

    "Per capita" (ie per person), we've just had 3 quarters of negative growth. It is only because the country has imported more people into the country that overall growth is still increasing.

    TLDR: The overall pie is growing but your share of it is shrinking.

  • [Deactivated] on 17/06/2019 - 12:38
    +1

    2008 will be a walk in the park

  • Tasmaniac on 17/06/2019 - 14:41
    -1

    My old economic professor at Utas thinks we're still due to cop more fallout from the GFC. I think we'll be ok. We just might have to sacrifice more natural resources and let evil corporations like Adani build more plants.

  • [Deactivated] on 17/06/2019 - 18:12
    +4

    I don't know what recession is but 'will I be able to finally win a home auction' is what I'm interested in.

    • Trying2SaveABuck on 18/06/2019 - 07:47

      Negative economic growth for 2 quaters ie 6months

    • [Deactivated] on 18/06/2019 - 21:44
      +4

      Sure, if you don't lose your job first.

      • try2bhelpful on 19/06/2019 - 01:58
        +2

        A recession is when someone else loses their job, a depression is when you lose yours.

        • [Deactivated] on 21/06/2019 - 16:54

          One in five (20%) Australians aged 16-85 experience a mental illness in any year…and we're not even in a recession.

          P.s: Almost half (45%) Australians will experience a mental illness in their lifetime. Life must have been so much simpler way back when Truman made that statement.

          Source

        • try2bhelpful on 24/06/2019 - 08:28

          I was talking economic depression.

  • mrtin on 22/06/2019 - 21:41

    Some theories suggest the crowd is usually on the wrong side of right.

  • jlim87 on 24/06/2019 - 13:04

    So glad I put aside some USD in another account while our dollar continues to drop.

    Most of the forecast says that interest rates will continue to drop. Is this the consensus from most people here? Thinking of waiting before I refinance my home.

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