As Australians, we’re known for our resilience and ability to weather storms. But the latest economic figures suggest that we might need to brace ourselves for some financial headwinds. The Australian economy’s growth rate has continued to weaken, with recent data showing a less-than-expected growth of just 0.3 per cent in the September quarter and 0.8 per cent through the year.
The Treasurer, Jim Chalmers, has acknowledged the situation, describing the growth of our economy as ‘positive but weak.’ With interest rates, cost of living pressures, and global uncertainty all playing their part, it’s no wonder that many Australians are feeling the pinch. The growth figures are not only below historical averages but also below market expectations, indicating that demand is weaker than most economists had forecast.
For many of us, the most tangible sign of economic health is our own household spending. Despite recent tax cuts and pay rises, household spending remains flat. In fact, household consumption has barely moved for the better part of 2024, with no growth in the last quarter and only a 0.4 per cent increase through the year. Discretionary consumption, which includes non-essential items and services, has fallen by 1.1 per cent through the year. This is a clear sign that households are tightening their belts, a move that’s hardly surprising given that interest costs have tripled since rates began rising before the election.
The Reserve Bank of Australia (RBA) has its eye on inflation, which remains beyond its 2 to 3 per cent target. This month, the RBA signaled that it would need to observe a sharp decline in inflation sustained over more than one quarter of data before considering cutting the cash rate from its current 4.35 per cent.
How are you adapting your financial strategies in these uncertain economic times? We’d love to hear your tips and experiences—share them in the comments below, and let’s work together to navigate these challenging economic waters.
Also read: Your early retirement plan is possible – even in today’s high-inflation world
