While the price outlook is the same, this boom is different.
So, who saw that coming? The Aussie economy is booming.
(Hint: I did.)
But no, we got the GDP data yesterday. This is the measure of the what we produced in the December quarter.
It posted a thumping 3.1% in the quarter.
In normal times, many developed economies would be happy to do that in a year, let alone in a single quarter of a year.
Not only was it a strong number, but economists were also expecting 2.5%, so it blew those expectations out of the water.
And not only that and that, but it followed on from a revised-upwards surge of 3.4% in the September quarter.
This is the first time ever that we’ve seen GDP rise by more than 3 percent in consecutive quarters. Ever.
That said, it still follows on from the largest ever quarterly decline in GDP in the June quarter, and GDP is still 1.1% lower than it was a year ago.
So the economy is coming back and coming back quickly and coming back more quickly than people were expecting, but we’re not all the way back. Not just yet.
But still, it’s a good result. And much better than we were all hoping for. As Treasurer Josh Frydenberg said, “The Australian economy has recovered 85 per cent of its COVID-induced fall, six months earlier and twice as fast as we expected in last year’s October budget.”
I mean, of course he would put a positive spin on it. But that’s not spin. Things are actually looking pretty sweet.
This is how the quarterly data charts out over the long run.
So what else jumps out for me?
One of the key takeaways I reckon is that we’re successfully seeing the economy get of government life support.
Remember it was government spending – some of the largest on record – that put a floor under the economy through 2020.
And that was great. But the hope was always that the private sector would get back on its feet, and that would allow the public sector to wind things back a bit.
And the latest print seems to suggest that this is happening.
In the December quarter, direct economic support from the federal government halved, but household consumption was up a solid 4.3%.
Probably the clearest picture you get of this is in the ‘net savings data’. Governments are spending less and saving more, while households are saving less and spending more:
The other story that’s worth noting is the rebound in the services economy. So while household consumption (which is 60% of the economy) led the rebound in December, it was driven by a 5.2 per cent increase in spending on services with a 17.5 per cent increase in spending at hotels, cafes and restaurants.
That’s a good news story.
And all this, puts us on top of the world. We’re the fastest growing developed economy in the world.
Go, Aussie go.