WELL, that’s a blow. The worst global financial crisis for two generations and Australia can’t even muster a decent recession.
This morning’s numbers, showing the economy grew - grew! - in the March quarter, provide disappointment for households that have traded down from Leconfield to Lindemans and for companies that have appeared a little too eager to wave the pink slips.
Were their budgetry sacrifices in vain?
You’ve spent six months rationing the kids’ pocketmoney at home while ``rightsizing’’ - sacking is such as ugly word - the marketing department at work only to be told we’re not actually in recession.
Where’s the kudos in making tough decisions if times aren’t actually tough?
Today’s numbers were expected to show two consecutive quarters of falling gross domestic product - the standard definition of a recession. A fall of 0.5 per cent in the December quarter raised expectations we’d get an official recession. Instead, GDP rose a healthy 0.4 per cent in the March quarter of this year - a good result in any normal year).
Year on year, we’re still in the black. As Maxwell Smart would say, we “missed it by that much”.
The numbers released this morning by the Australian Bureau of Statistics are just that - numbers. And, as the increasingly annoying refrain goes, even if it’s not an official recession, for a lot of people it will still feel like one.
The figures would certainly have been worse if the drought hadn’t broken (the non-farm part of the economy has actually been in recession since the September quarter) and we hadn’t been stimulated.
But we’re still not in the same league as the US (down 5.7% year on year), Japan (down 8.6%) and the European Union (down 4.6%).
``This is a recession that Australia didn’t have to have,’’ Liberal MP Pat Farmer said this week, getting a little ahead of himself. Perhaps we won’t have one after all. But with all but two developed nations in recession, it will still be absolute miracle if Australia, even with its banking system remarkably intact, skates through the crisis with GDP above the line.
Most economists - yes, the same ones who 18 months ago were predicting a long, unbroken golden age of economic sunshine - had in recent months forseen an official recession (even if a few wobbled yesterday after a stunning set of trade numbers).
Even Wayne Swan has been able to bring himself to utter the R-word. Now they’re all banking - with a fair degree of prayer - on a swift recovery.
As we bounce along the bottom, though, it’s hard to pick a clear trend in the wave of economic figures.
Until yesterday’s trade numbers, everyone thought the March quarter was rough, particularly with business investment down sharply.
But the first flush of statistics from April onwards are more positive. Retail sales, boosted by $900 cheques for the living and dead alike, were up strongly, and housing approvals, boosted by the extended first homeowners grant giveaway, also surprised economists.
Everyone from Reserve Bank governor Glenn Stevens down reckons there’s likely to be worse to come, particularly with unemployment still a concern and the big hit from falling commodity prices yet to come. Swan, and his Treasury advisers, reckon we’re in for zero growth this financial year, followed by a mild 0.5 per cent fall in 2009-10. But then things start to pick up.
Before long, we’re racing along at 4.5 per cent a year _ the kind of pace seen last time we emerged from recession.
Around the world, the hunt is on for so-called ``green shoots’’ of recovery, economic markers poking through the black like the Australian undergrowth after a bushfire.
The strong Aussie dollar, which this week broke through US80c, shows traders are confident we’re in for a quick recovery, dragged out of the mire by China and the effects of its own $700 billion stimulus package on the commodities we export.
There are certainly plenty of positive stats around - and the bulls embrace them as evidence the worst is over. `
`Yet,’’ argued The Times’s veteran economy watcher Anatole Kaletsky this week, ``most economic commentators have remained sceptical or even contemptuous of all this evidence. Surely, they argue, the threat of another Great Depression could not just have vanished in a puff of statistics? Is anyone so naive as to think that a crisis caused by over-leveraging can be solved by government borrowing and money-printing?’‘
Naive? Maybe. But wouldn’t it be nice?
- Clive Mathieson is deputy editor (business) at The Australian
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