The National Accounts were released yesterday.
It showed 1.! % growth in the March quarter and annual growth of 3.1%.
However Nominal GDP was 0.5% and 2.1% respectively. as the CBA says this has essentially been the norm since September 2014..
The major problem here is the population grits its teeth as the Government crows about these results because they live in the nominal economy which is well below trend.
Let us quote them
"Nominal GDP, which is the broadest measure of income in the economy, and is effectively the tax base, grew by less than real GDP in QI. It rose by 0.5%. In annual terms, nominal GDP (2.1%) is running below the pace of real GDP (3.1%). Historically it’s a rare thing, but it has been a familiar outcome since September 2014. It is why the economy feels weaker than the output numbers imply. Income weakness weighs on both household and business confidence and also on inflation expectations. It also makes debt repayment harder, notwithstanding record low interest rates. The RBA is pushing against income weakness and falling inflation expectations by running an incredibly loose monetary policy setting. We expect to see more policy easing as a result.'
It is interesting no-one talked about unit labout costs which fell for the second successive quarter implying a boost to competitiveness. further evidence of how our flexible labour force reacts. Perhaps that is why it was not mentioned.
This could well be where strong GDP figures help the Opposition and not the Government/. Paul Keating would empathise!