Australian Economy

The RBA has crashed the economy

Evidence is mounting that the RBA has crashed the consumer economy.

It’s no wonder, given record mortgage payments, the fixed-rate rest, stalled house prices, a record tax take and cratered disposable income.

Yesterday, we saw a shocking retail result for December at -2.7% month on month and 0. 8% year on year. Real volumes are going to be down -3%.

Some of it was Black Friday giveback, but certainly not all:

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When we consider that the RBA hiked rates in November, the result is consistent with a consumer shock.

We also have December Labour Force, which showed an equally large tank in the number of employed people and was downright sick for hours worked:

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The unemployment rate is lagging, but not for long. Especially so since we know the country is flooded with Albo’s Indian army.

Another data point is the NAB business survey from December which included this little beauty:

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Finally, consumer sentiment is absolutely in the toilet:

The Westpac Melbourne Institute Consumer Sentiment Index declined 1.3% to 81 in January from 82.1 in December. For consumers, the new year looks to have picked up where the old one left off: cost of living and high interest rates continuing to dominate and sentiment bumping around deeply pessimistic levels.

The latest January read is in the bottom 7% of all observations since the survey was first run in the mid-1970s. More pessimistic starts to the year have only been seen during the deep recession of the early 1990s.

We need more to corroborate an outright consumer stall, but it is eerily quiet at my local mall, and this data shows us why.

The RBA is going to cut earlier and deeper than markets expect.

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