Australia hasn't had a recession since 1992 - I was too young back then to be affected.
There is talk that a recession is likely in the near future.
For those who were adults, can you share any experience about what happens during a recession for the average person? Any personal experiences of what happened during that time? Did you lose your job and couldn't find another one? Did your business suffer? Did it have no noticable difference to your life at all?
@digitalbargain: Anyway back to my point, even if you are a grand a week in the hole (say you earn 75k) not easily made up with cutting back on "wants".
And yes, recessions don't really hurt people that don't lose their jobs. If they do, it is the ones that are extended to the hilt and not the general population.
@serpserpserp: How does your point differ to the point in my first post? (I'm genuinely a bit confused.. my point was very much if you can't service your debt, you trade off on 'needs' not 'wants')
@digitalbargain: It sounds like you are telling people that in a recession you are fine if you can service debt and you are not fine if you can't. But honestly that applies to any economic cycle. In a recession the main driver of not being able to service debt is losing a job. It isn't about deciding to not pick up some wants or even choosing between needs, it is simply not being able to afford anything because you are jobless.
It sounds like you are telling people that in a recession you are fine if you can service debt and you are not fine if you can't. But honestly that applies to any economic cycle.
i never denied that that is different to when in recession (i agree with this). i simply stated there are are more people that can't service their debt in a recession.
In a recession the main driver of not being able to service debt is losing a job.
yes, fairly obvious too
It isn't about deciding to not pick up some wants or even choosing between needs, it is simply not being able to afford anything because you are jobless.
If you lose your job, you usually start by tightening up on the 'wants'.
you can lose your job in any cycle too.
the sky doesn't just fall in for everyone the day you lose your job (in absolute terms where you can't afford anything at all). you could have rainy day savings, you could have other assets you liquidate to create a buffer until you find employment or pick up part time employment, or go on welfare, cash out super, borrow from family, or whatever it is..
@digitalbargain: OPs question was what happens to average people during recession.. my simple answer is that for some people (ie. those that can still service their debt) will simply cut back on a few wants (be it outings to movies, restaurants, whatever) and that for those that can't service their debt it gets painful (perhaps they can't afford to keep their gas on, or pay their internet bill)
ah those were the days $1000 a week in the pocket tax free income
It ended my father's career. He was trying to get his career back on track following major illness some years earlier, then got put out and was basically "too old" to get back in.
It effectively wiped out my parents' ability to have any form of financial or social freedom into their "retirement" years, forcing them into odd jobs and social security to make ends meet.
This is the outcome of a Labor Treasurer glibly proclaiming it as "the recession we had to have".
That's very sad - I note those comments were made a couple of years after tax cuts to address the recession.
While I'm sure if was bad for you and your family, it likely would have been much worse had the economy been allowed to continue on it's current trajectory for longer. Bubbles have to pop sometime, and smaller bubbles make a smaller pop. This is what Keating was talking about when he said it was the recession we had to have.
It wasn't 92 that was the killer… it was 89!
By 1992 things were getting a little better, at least everywhere else but Victoria.
But in NSW, 89 and going into 90 was horrible.
Cash rate in 89 was just under 20%.
By 92 it was down into single digits (6-7%?!?).
That's a huge difference. Everyone was still struggling and trying to catch their feet… but the sledge hammer years were the late 80's for sure.
I was 9. Life was pretty sweet.
I had just received my pen licence.. best year ever
I still don't have my pen licence.
For all of Year 3/4 I lived in constant fear the cops would get me for my lack of pen licence.
I finally got mine in high school…..since the teachers complained why I was always writing in pencil….got back to my yr 3 teacher and got my pen license. i feel proud now!
ladies get ready for cheap cheap cloths from Forever New, just saying.
I was too young to know and so my folks were obviously lucky enough to keep their jobs for me to notice anything at home.
Back then, even though I had heard Lex Luther say people will always need land, people did not seem obsessed with useless "investments" based on something sitting around producing nothing hoping someone else, especially from overseas, to pay way more for it to profit that way.
/end rant
Unfortunately no idea how I stack up against the average these days as an adult. I'm certainly below the OzBargainer self-reported apparent average LOL
I've lived through 4 now.
1st one was the 87 stockmarket crash. I was at high school so wasn't really affected, but I heard my rich friends parents moaning about it. For most people back then it wasn't anything.I do remember seeing a hell of a lot of real estate for sale signs around though.
2nd was the early 90's, just as I was graduating uni. There were no jobs to be found. So I re-trained in IT since there was supposed to be some sort of shortage. I graduated that in '98 and worked for 2.5 years before…
3rd the dot com burst. Contract IT work dried up overnight. There was still permanent jobs around in IT though. But even now the wages haven't gone back up to where they were at the turn of the century, not even close. Like basically 2 decades later. I've been on the same rate contracting since '03 then.
4th the GFC. Didn't really affect us here in Oz.
What area of it are you in and where are your located?
Were you earning a crazy high rate for 03? I can't imagine how you would still be earning the same rate as back then.
Embedded systems programming. Actually I am earning less now p/h than I was in 2001. My rate has not changed since I went back to contracting in 2003 after all the work dried up in 2001.
Either you're in a rural area with not many opportunities or you need to update your skillset in an adjacent field with more demand.
I don't know many dev contractors with decades of experience earning less than $100 an hour.
@witsa: Hey, where are you finding these contracts for more than $100/hr? I'm a Javascript dev and I can't find anything at the moment. :(
@witsa: Well its a tad bit more complicated than that. Lets just say if the GBP/AUD rate was still what it was back back then, I would still be on just over $100p/h after tax. But either way my GBP p/h rate is still 5 quid down on what it was in '01, which is the main point.
2001 was ridiculous though - teenagers on $150 an hour making vapourware!
I was in a recession proof job - Army Officer. I remember there being lots of stories on the news and in the papers etc but my only disappointment at the time was that there wasn't any wars to fight!!!
This is usually a good thing unless you enjoy killing people.
or you spend 15 years training to do a job that you never actually get a chance to go and do
Armed forces job is to keep the nation safe. Don’t need to fight wars to do that job. Same with nuclear arsenal.
1992 was similar to all the years in the 90s…too much gambling, drinking and women
Were women better back then?
Had holey underwear more often than not.
I've been hearing talk of a recession over 5 years now and have yet to see anything. My income and wealth has increased substantially though, so just seems to be going up if anything.
I think people have no clue what's going to happen realistically and it's probably not worth worrying about until something happens tbh.
I lost my house I was purchasing through the B$%^&($D HOME FUND SCHEME thanks to the actions of that MONGREL PAUL KEATIN, may he rot in hell!!!!!!
The NSW Home Fund Scheme?
What did that have to do with Paul Keating?
Being rich and wealthy is being obese and unhealthy anyway. Society's belly should be receding not growing. Growth is what unhealthy things like cancerous tumors do…
Obesity is more prevalent in those from lower socioeconomic backgrounds
To be skinny is to have money then? Strange charities want money for starving kids in Africa then. They really should be asking money for the poor little fatties over there instead. For just a dollar a day you can get chubs off the street and into a gym to burn all those poverty kilos off. Act now before another child in poverty dies from blocked arteries :)
I was told by a reputable source that back then on the dole "you could afford to live within 30 minutes of the Sydney CBD, smoke and watch a movie at the cinema every week with change left over".
"Furniture was the expensive part of living".
"Plenty of unemployed sheilas for the pickin' at the local RSL".
"Plenty of unemployed sheilas for the pickin' at the local RSL".
Then you could pair up in a 1 bedroom workers cottage in Paddington and live like kings!
I was a kid but my Dad moved to another country and got paid in tax-free US dollars so he could pay his mortgage and not have to pay child support. My grandad fortunately had no debts and picked up some very cheap property and looked after us. I've worked with a few people who were mid building their dream house when the recession hit and their builder went bust. They had to sell in a market that offered them nothing and move somewhere they didn't want to be. Horrible time.
I worked in a retail sports store from late 80s to late 90s.
Shop went from having 12 staff on a busy day (10 casuals, myself & owner) to zero casuals & boss said to keep me on, I'd have to work when it was busy only, which meant lots of weekend work. No overtime or penalty rates but time off in lieu. So roughly worked 60 hours for about 9 months of the year, but got paid every week, ie. 52 weeks. Got a few benefits like cheap air travel.
Remember going to annual trade shows in 89, 90, 91 & 92 & when the recession hit, hardly anyone went to trade shows, where retailers placed most of their orders for next 12 months stock. The boss ordered about 1/8 of his normal order.
Boss was trying to find any way of surviving. He opened an outlet store. No frills, shitty space & only took cash & no credit cards, no laybys, no refunds ever. It's probably what saved him. He cleared out his older stock through the outlet store & did really cheap advertising in weekend shopper which stated look at $2 website. Amazingly people came from far & wide. I managed it for a while by myself. Many people would drive 100 kms to save $20. Weird if you ask me. People don't value their time, their petrol & wear & tear on their car.
After about 2 years, things recovered, but instead of buying any lower end stock, he only bought middle & upper end. He starting employing casuals again, but less of them & he said he made more money with less turnover & less stress. Retail hours changed & he stopped opening Mon & Tue & opened longer hours on weekends, especially on Sunday. I got sick of working weekends so gave it away & sold real estate for 5 years & did well, then starting building houses one at a time & selling them. Should have kept more & paid less tax.
I was quite young, not yet a teenager, but I remember my father's steel fabrication company collapsing before just before the major crash in 92. He'd left the management of the steel company to a new person while he started a new construction company. The steel company ended up trading insolvent because the new manager had hidden many of the unpaid creditor debts from the books, which didn't come out until the cash in the business hit zero with near $1m+ owing. I remember him being stressed with nosebleeds, working every night at the dinner table when we were going to bed and crying over what was happening to the staff. He was fortunate that the construction company had mostly government contracts which meant that it survived with just a few projects canceled, but things weren't looking good. He had to take out a few mortgages on our house(at the edge of north-west suburban Sydney) to try and pay the debts.
It was a family of 5 kids, but my mother somehow found the time to start a calligraphy business from home to help with money. During school hours she would be doing basic signwriting, screen printing and wedding invitations. My mum was(and still is) a trooper! With mum really busy we learned to do more stuff for ourselves, we had to do our own washing and make our own lunches for school.
It stuck in my mind that we started grocery shopping exclusively at Franklin's and bought only Black & Gold brand. We cut back on just about everything, no new clothes and we bought second-hand uniforms for school. We would usually go camping for holidays, but I remember we couldn't even afford to do that anymore.
It's weird the things that stood out: We wished for the regular Uncle Toby's muesli bars like all the other kids had, Franklin's ones came in a weird plastic wrapper and we felt different. At school, we'd try to hide the fact that we had different muesli bars. For pocket money we usually got a dollar or two when we did our chores each week, but it started going into "mum's bank" for groceries. We'd get paper notes which she said we could use to get the real money later.
At the time they kept the problems away from us as much as they could, but kids can work things out. I remember being scared that I was too "expensive" to keep and I used to have nightmares that I'd come home from school and they'd have sold the house and moved without me.
Wow. This was good write-up.
Parents keep problems away from kids but when kids grow up, they keep parents away..harsh reality (nothing against you ChickenTalon)..
We can't afford a recession. Our banks will collapse forming a black hole and taking everything with it. Maybe not… but I can't afford a recession. I have a big mortgage.
we're already in a recession despite what pollies or media say (they are both trying to talk it up).
It's going to get a lot worse. Talk to anyone who was an adult in 1992. It's scary.
It's a pity we didn't have a recession earlier, as it will make this one much deeper & longer.
If you have a mortgage, put every cent into it ASAP.
Unfortunately, many people paid far too much for their real estate & now have negative equity.
Unlike in USA, you can't just walk away from a mortgage, when you have negative equity.
About your last point, we have a better system in Australia where you can wipe the slate clean, wait 7 years and start again.
But why would you walk away from negative equity in your home anyway ? After all you primarily bought the house to live in, and at the time you could afford to according to your loan officer.
Who cares what the value is, or if the neighbourhood goes up or down in value. The loan remains the same / slowly diminishes, and the repayments remain the same (and have recently been falling).
I agree with your point to pay off your mortgage ASAP. It will only take a maximum of 20-30 years - and the sooner it's paid you're literally "home free".
It's avoiding the trinkets along the way - looking at you $2000 Apple
An Apple a day keeps recession away… or something like that.
I was in high school during that time. Apart from the fact crime was high (got broken into 3 times in a year and car stolen) kids at my school would get rolled for their shoes and then, roll other kids to get more shoes. Prolific shoplifting and teen robbery was real. Treats such as tuckshop were pretty rare too.
This is something that has changed massively.
Property crime was much more prevalent. My old, old Commodore was regularly broken into and 80c of toll money taken, or the radio speakers. People were skint, and $3 made selling a pair of speakers at Cashies was lunch or a pack of smokes.
Because the country as a whole is more affluent now, property crime is lower. But a couple of years of a recession will see it climb again.
I was still in school and playing slot of sfamicom/SNES games.
Actually 1991/1992, it was a special year for me as I forgot to mention I was always getting in trouble….teachers, principal and problem collecting money from students.
selling comic books during school hours was asked to go to the principal office and explain what I was doing.
Told him I was just selling comic books and nothing else and he asked me how much I made. As an honest kid, I told him $100 on good days which he looks quite impressed and asks me not to sell them during school hours as it has to be before or after.
But the bad name was there as the kid who went to see the principal and stayed with me for a while.
It was the year I quit comic books too as my comic book backorder list was about 2 meters long from a comic shop and my sister had to bail me out close my account.
Some interesting insights here.
Slightly off topic I'd like to recall the pilots strike of 1989 when Queensland was growing it's tourism industry a la futurist Christopher Skase.
(He was trying to create a market for the overseas elite - Mirage Resorts and bought the MGM film library for his Channel7 network)
There were Mum & Dad accommodation businesses that were wrecked by the lack of movement of tourists.
Many pilots left the country to work overseas. The air force was brought in to provide passenger flights.
Specifically 1992, we moved into our brand new house. It was the last house fully completed before our builder went under and so we dodged a bullet.
Other houses were having the windows and wiring removed by the contractors having not been paid.
Workwise my employer at the time kept his workforce intact in the expectation work would pick up soon enough. He had one rule - that any mistakes would be paid for in beer on Fridays by the culprit. Oh, and we had very l-o-o-o-o-n-g smoko and lunch breaks.
A quote from my 73-year-old friend: 'back then Australia was boring but we understood each other'.
'back then Australia was boring but we understood each other'.
Haha, I'm tempted to make a "because everyone still spoke English" quip…
I walked around counting all the 'for lease' signs in the CBD! (I was still a kid back then…)
I've walked past quite a few places with these signs too at Perth CBD….looks like businesses are gone left and right….
With all this debt talking on this particular thread, I wonder if any of those politicians have ever played Tropica or any similar economic/trades/city builder based games…and whether or not they would complete the entire game successfully….without getting negative money….
You actually have a good point, this will eliminate pretend play politician who only do the talk but not walk the talk.
I am certain majority will not do well in the game.
A simulation test before you can be a politician.
I like it!
I thought there was already a test or some sort of competency course you needed to take before becoming a politician? Maybe the test is really lax and not as bad as those simulation games I've played….or those simulations games are too exaggerated for what the real world really is…in which case it isn't exactly a simulation game but more rather a strategy game…?
Worked out pretty well for us. My parents sold their two small houses, and used the money (plus some loaned from family) to buy a mansion of sorts, which is where I grew up.
Didn't work out so well for the sellers though. They had bought the mansion with dreams of fixing it up, and restoring it to its former glory. They'd liquidated everything they'd spend 20 years accumulating, then taken a mortgage out on the house to finance the repairs. Something like 500K altogether, and they lost just about all of it when the bank forced them to auction.
Agro didn't give out prizes anymore.
I lost my home because of keatings "the recession we have to have" I noticed he did not!
@serpserpserp: Ah yes, whilst the average Ozbargainer on $300k pa might be 'thousands of dollars a week worse off', this is probably not true of the general population..
(And sure, the dollar value is increased when measuring in fortnight vs week.. for some people it might be monthly)