Recession for Australia in the next 18 months? vote!

I'm interested in the PropertyChat collective brains-trust on this...

Will Australia have a technical recession in the next 18 months? That is sometime before the end of 2023 calendar year. Two quarters of negative GDP growth.

The last one we had was during mid 2020 when Covid lockdowns, etc were really starting to hurt.

Or will things not turn out as bad as the bears think?

I've got my wooly bear coat on presently, so I'll start by voting Yes

 

Biggest factor will be China.

Will they drive growth and have no choice but by Australian Iron ore? I would say yes given the 2023 time frame. So no recession....

 

what does "Two quarters of negative GDP growth." mean in real terms?
Instead of getting stuck in the word "Recession" should we rather target unemployment figure for more realistic assessment?
End of the day it should be about job losses, how many and for how long.

 

No

 

I don't think so. I think stock market valuations and house valuations could come off even 30% and we still wouldn't hit recession. Jobs and demand is too strong. Values will creep back up as long as demand and jobs are there. Tourism is coming back very strong. Most of these inflated values were just related to super low rates so a retreat back isn't the end of the world. The stock market and housing market isn't always the economy. Pent up demand is very strong which is where alot of this inflation is coming from. My bet is a big bust around 2025 leading to a long period of low growth/recession. When jobs go, that's when you have a real problem with housing over the longer term.

 

Nope, RBA just hinted 4% rate by year end won’t happen. Nobody wants recession anymore… I see stagflation for a long time in Australia, like Japan lost decades, many countries will follow that path including China.

 

That sounds like polispeak when a recession pops up under their watch

But yes, it's not a definitive picture.. I guess throughout the decades people have made a big thing about them so worth considering. It's just one categorisation of many in order to gauge how the economy is going.

 

In the current environment I'd be stunned if there was one in nominal GDP terms. In real GDP terms who knows, pick your inflation measure and that'll determine the answer.

 

I think it’s 50/50 but 18 months is a long time. If I have to vote one way or the other, right now I went with NO.

 

if we used a “true” inflation, that better accounted for cost increases over the last 10 years, then we probably have been having a recession in real terms for a decade or more. Especially if it’s measured in GDP per capita instead of total GDP!

 

To answer the question of the thread:

obviously it’s anyone’s guess as there’s a million variables, based on the information we have available to us now I don’t think there will be a recession, assuming the standard definition with real terms rather than nominal terms, and using total GDP rather than GDP per capita.

• The shock increases in fuel/energy costs can self-correct, as people’s sentiments change to be more conservative with expenditure

• There is currently no big impetus for further supply shocks. It is anyone’s guess if this can change tho..

• There is no current indicator that things will be looking bleak, it seems that the world wants to continue to overproduce..

• Immigration tap is turning up to the 9s. This increases demand, and makes it more difficult for gross gdp to be negative for two quarters

• We are actually still critically under supplied in core markets such as affordable housing, it’s likely demand for raw resources will increase globally, Australia is a major supplier. Education exporting seems to be able to restart. Australia is still critically undersupplied on services such as those in healthcare. This is a big percentage of GDP.

• the “rapidly” rising interest rates are only “rapid” when measured against the starting base. Example: increasing from 1 to 2 is double, a.k.a. a 100% increase, increasing from 6 to 7 is a 16.67% increase. So a smaller measure when measured against the base, but the same magnitude of movement. The overall interest rates are still at historic lows, so whilst bad for house prices, it’s not necessarily deterring businesses from finance as much as it is made out to! People get worried about the cash rate potentially hitting 2-4%, but realistically this is just a sentiment issue. In the real world a business finance rate going from 3-12% to 6-15% (the large range is to account for a wide variety of business finance products) is not too big an issue, as it is still very useable. Poorly run business will be flushed out, which is overall better for an economy. Just like decreasing rates from 3% to 0.1% barely spiced up the economy, increasing it from 0.1% back to 3% will barely mean anything for businesses. The fed made a big mistake not trying to get the baseline funds rate into a higher range, to prevent the inflation of asset values. Inflating asset values is not as productive as $$$ going towards labour, productivity and product development.

• the bullet point above got a bit long, so this summarises it: “rapidly” rising interest rates affect home prices significantly, but will have a less noticeable impact on businesses. Businesses are the more productive of the two!

• Household consumption might take a hit, of course, and that’s a massive thing for total GDP. It will be interesting to see if it will be enough to influence the economy enough for a recession.


Disclaimer whether or not a recession will happen is something that can’t really be predicted with accuracy, as there are always variables and there will always be uncertainty. You simply cannot account for or forecast everything.

 

Well Lowe said no, so then, in 18 months?

 

Not in 18 months we don’t. Maybe 3 years.... still too much money out there trying to find a home

 

No. I need a set of new Bridgestones for my commodore and the thought of a recession is muddling my thinking.

 

But @datto, every single Bridgestone was worth it

 

Lowe says there won't be a recession.

He also said interest rates wouldn't rise until 2024.


Recession it is then.

 

Wow look at that! Magic.

 

I don't like making predictions, especially about the future. Instead, I like to be ready for anything. If a tenant damages a property then insurance can cover most of this. If the power fails then I have candles and the UPS takes care of the computer. If income drops at 9.8 m/s/s like in the pandemic I have cash in the bank to manage cashflow. If bargains arise like in the pandemic I can buy. I did this, no longer up a lot, just up 90 per cent.

There's no sudden change of fund allocation or behaviour, just slow adjustments, such as spending less to accumulate cash to build up the cash percentage. After recovering from 2020 I aimed to be better prepared for the next correction, recession, or the like. I reached this point about six months ago, and now it's paying off. By the time that the plans are approved I will have enough for a substantial PPOR reno, with savings and cashflow quite adequate.

Warren Buffett: Only when the tide goes out do you discover who's been swimming naked. Crypto, BNPL, recent investors, people with high LVRs, people who gave false information when applying for loans and others are now looking at distant waters. They may have been part of this. From bonfires to naked swims: Here's how the winter solstice is celebrated I'm fully clothed, and it's too cold for naked swimming, about 46 mm.

 

Only when we have 2 consecutive quarters where GDP is in the red
Watching