Australia's 27-year-old track record of avoiding recession is coming to an end as yesterday's ABS numbers show the economy is already in effective recession, according to the University of New South Wales.
Yesterday, the Australian Bureau of Statistics posted a 0.2% growth in gross domestic product for the three months to December 2018. Consumer spending grew at 0.4% in the quarter. GDP per capita shrunk in both Q3 and Q4.
UNSW Business School's Richard Holden labelled the GDP is "very poor" and should be much more than the current headline level.
"The ability of Australia's economy to avoid recession for 27 years is great, but today's ABS figures show we've now entered an effective recession in Australia, with GDP per capita shrinking in both Q3 and Q4 of 2018," he said.
"Two quarters of negative growth - that's a recession on a per capita basis - and the figures show a large part of that is consumer spending, growing at only 0.4% in Q4. It's a huge slice of the economy at almost 60% of GDP, but it has stalled.
"If you remove the population growth in Australia - of about 0.4% - from the headline GDP figure - of 0.2% seasonally adjusted in Q4 of 2018 - it shows growth is negative," Holden said.
Speaking yesterday, Treasurer Josh Frydenberg did not agree.
"If you want to look at a good indicator of living standards, then real net national disposable income is a better indicator, and that is up 2.1% through the year," Frydenberg said on the ABC.
"Whereas, in Labor's last year in office, it was down 1.2%. Real GDP per capita and the talk of a recession really is inaccurate because the best indicator of a recession is what happens to GDP growth and that has been consistently positive."
Holden said the economy should be roaring along under the combination of stubbornly low inflation, unemployment levels and persistently low wage growth. The fact it is not, is further evidence Australia's economy is stagnating.
Holden also believes the Federal Budget on April 2 will have further goodies for voters in the run-up to the election and Australian taxpayers are unlikely to face a rise in taxes.
"After all, the increase to the Medicare Levy was axed last year," he said.