The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

Recession

<html><body>
EXPERT OBSERVER
The Australian economy contracted by 7% in the June quarter, broadly in line with expectations (both Westpac and market median at -6%).
This is by far the largest quarterly contraction in the Australian economy on record (previous record was -2.0% in June 1974).
However by international comparisons the contraction is relatively mild with UK (-20.3%); Europe (-12.1%); US (-9.1%); and Japan (-7.8%) all exceeding Australia’s contraction.
Of course these extraordinary numbers reflect the impact on activity from governments’ actions to contain the health damage to citizens from the Coronavirus.
As with other countries the primary impact of the containment policies was to restrict consumer spending. For Australia consumer spending represents 56% of GDP yet the 12% contraction in consumer spending explained 98% of the overall contraction in GDP. Components of consumption which were most adversely affected were: transport services (fell 86%); accommodation services (-77%); catering services (-56%); recreational and cultural services (-52%) and health (20%).
Household gross disposable income rose by 2.2%, largely reflecting the boost to social assistance benefits.
Hours worked fell by 9.8% although wage incomes declined by only 2.5%. That “gap” is explained by the JobKeeper subsidy payments which were used to maintain the wages of workers who experienced a significant reduction in hours worked.
With the lift in household incomes and the collapse in spending the household savings rate soared to 19.8% from 6% in the March quarter.
The sharper fall in hours worked relative to output points to the disproportionate job losses in the labour intensive service sectors of the economy.
The dominance of consumer spending in this result is generally highlighted by other components of expenditure, which were weak, reflecting the recession conditions, but not spectacularly so – business investment fell 3.5%, including a fall of 6.8% in machinery and equipment and a partly offsetting rise in infrastructure investment; residential construction fell by 6.8%; and real estate activities fell by 18.6%.
Nevertheless we can expect that the lags from recessionary conditions in the June quarter will continue to impact business investment and housing for the remainder of the year.
Exports fell by 6.7% (including a 24.6% fall in travel services and a 46.6% fall in transportation services) while imports fell 12.9% as the international border closure triggered a 98.7% fall in travel services and a 32.9% fall in transportation services. Overall net exports contributed 1.0ppt to GDP growth.
The growth outlook for the remainder of the year will be dependent on the success which government achieve in containing the virus.
On the positive side we assess that the economy had considerable momentum going into the September quarter following the 4% snap back in hours worked in June and the lift in jobs in June and July. Of course that momentum was severely impacted by the deterioration in Victoria which represents around 24% of national GDP.
Our current figuring points to a flat quarter overall in September to be followed by a strong recovery in the December quarter. That recovery is dependent upon our base assumptions that Victoria will move through to a Stage2 in the December quarter while other states will avoid any damaging second waves.
As we have seen in today’s report the governments’ support packages have played a key role in containing the impact on household incomes from the containment policies. The December quarter will – on current policy settings – see a considerable scale back in that support affecting both households and business.
However, as demonstrated by the spike in the savings rate, the household balance sheet is in much better shape to cope with the partial withdrawal of the government payments.
The upcoming Federal budget, on October 6, provides the government with another opportunity to reassess and reset policy support. The annual Budget will undoubtedly be expansionary, the question is the degree of additional stimulus and the form that takes. The bringing forward of already legislated income tax cuts is an appropriate action in the current environment.
Overall we expect that the net positive effect of the general reopening of the state economies on the consumer sector, including relaxation of key state border restrictions will underpin a strong recovery in the December quarter.
</body></html>

bevans-rYk9SxEa4r

What does the record 7% collapse in GDP mean? Bill Evans

soliver-smf6LQXgW9

Household spending was the biggest drag on the economy: Shane Oliver

<html><body>
EXPERT OBSERVER
The 7 per cent fall in the economy in the June quarter is the biggest decline since quarterly records began in 1959. In annual terms, the economy fell 6.3 per cent in the June quarter. The annual decline is similar to the 5.8 per cent fall in the economy in 1945 (5.8 per cent fall) but smaller than the 14.3 per cent decline recorded in 1931.
This is not your typical recession. It hasn’t occurred because there has been some policy mistake – like the Reserve Bank leaving interest rates too high. Inflation remains under control – prices are neither surging nor plunging. There has been no balance of payments crisis – record trade surpluses are being reported. And the federal budget was broadly balanced at the start of 2020. Rather the recession is the result of a community lockdown to battle a one-in-a-hundred-year pandemic. And the whole world has been similarly affected. 
Policymakers certainly aren’t sitting on their hands. An unprecedented amount of stimulus has been applied to the economy by governments and the Reserve Bank. Barring more second waves from the virus, the worst appears to be over for the economy. The hope over the coming months is that Victoria – and to a lesser extent, NSW, - can join the rest of the country in being relative ‘virus free’. 
It’s not your typical recession because home prices are still at or near record highs. Annual growth of retail spending is at 19-year highs. The Aussie dollar is just off two-month highs. And share prices are 36 per cent up from lows. 
The economic recovery has begun. But the path is uncertain and likely to be bumpy. The battle for normalcy has only just begun. 
We expect the jobless rate will rise from 7.5 per cent currently to around 9 per cent in the next few months. The aim will be to quickly get people back to work as the longer they are away from workplaces, the less employable they are likely to be. 
Somewhat perversely, there were two positive aspects in the data. Aussies saved more – the household saving ratio rose by 19.8 per cent in the quarter. Clearly it was hard to spend in lockdown but the government topped up people’s bank accounts. And productivity increased. GDP per hours worked rose 3.1 per cent. These are two elements that had been causing angst for policymakers in recent times.
What do the figures show? 
Economic Growth: The Aussie economy contracted 7.0 per cent in the June quarter after easing 0.3 per cent in the March quarter. It was the biggest contraction in gross domestic product (GDP) in the 60-year history of the series. 
The economy contracted by 6.3 per cent in the year to June. Growth has previously averaged 2.6 per cent over the decade and averaged 2.7 per cent over the last 15 years.
The non-farm economy fell by 7.1 per cent in the June quarter after a 0.2 per cent fall in the March quarter. Nonfarm GDP is down 6.3 per cent over the year. 
Farm GDP fell by 2.3 per cent in the June quarter to be down 6.0 per cent over the year.  At current prices, GDP fell by 7.6 per cent in the June quarter after rising by 0.9 per cent in the quarter. Nominal GDP fell 5.9 per cent on the year (decade average +4.5 per cent).
As at June 2020 the Australian economy was valued at $1,981.6 billion.
GDP per capita fell 7.2 per cent in the June quarter to be down 7.4 per cent. 
Contribution to the overall result: The biggest contributions to growth came from net exports (+1.0 percentage points); public investment (+0.1pp) and government consumption (+0.6pp). But detracting from growth was household spending (-6.7pp); inventories (-0.6pp); dwellings (-0.4pp); business equipment (-0.5pp) and other private investment (-0.4pp). 
Inflation &amp; wages: In terms of domestic price pressures, the household consumption implicit price deflator fell by 0.8 per cent in the June quarter. Annual growth eased from 1.9 per cent to 0.5 per cent. Real non-farm unit labour costs fell by 9.8 per cent in the June quarter and was down 9.3 per cent over the year.
The terms of trade rose 0.2 per cent in the June quarter to be down 1.8 per cent on the year. 
Productivity: GDP per hour worked rose by 3.1 per cent in the June quarter to be up by 4.1 per cent on the year. GDP per hours worked in the market sector soared 5.9 per cent in the quarter to be up 7.3 per cent on the year.
States &amp; Territories: The only data available is state final demand (more accurate data would include net exports but it is not available for all states and territories). State final demand in the June quarter: NSW (down 8.6 per cent); Victoria (down 8.5 per cent); Queensland (down 5.9 per cent); South Australia (down 5.8 per cent); Western Australia (down 6.0 per cent); Tasmania (down 7.4 per cent); Northern Territory (down 4.9 per cent); and ACT (down 2.2 per cent).
Consumer spending: Household spending fell by a record 12.1 per cent in the March quarter to be down 12.7 per cent for the year. Hotels, cafes and restaurants fell 56.1 per cent and Transport services fell by 85.9 per cent. Spending on furnishings and household equipment rose 9.5 per cent with Alcoholic beverages up 13.0 per cent.
The ABS notes: “Spending on services fell 17.6 per cent reflecting temporary shutdown of businesses and movement restrictions. Spending on goods fell 2.8 per cent driven by record falls in operation of vehicles and clothing and footwear, while spending on food recorded the biggest decline since June 1983.”
Industry sectors: Fifteen of the 19 industry sectors contracted in the June quarter. The biggest contribution to the overall decline in output came from Transport postal and warehousing (-0.9 percentage points) from Accommodation and food services (- 0.8pp) and Administration and support services (- 0.7pp). Output rose in Mining, Education and training; Public administration and safety; and Financial and Insurance Services. 
Other points: Profit share at record high. In seasonally adjusted terms, the ratio of profits to total factor income rose from 29.0 per cent in the March quarter to 31.1 per cent in the June quarter. The wages share fell from a 2-year high of 52.5 per cent to 49.4 per cent. 
Household savings ratio. The household saving ratio rose from 6.0 per cent in the March quarter to 19.8 per cent in the June quarter in seasonally adjusted terms. 
Imports rose as a share of spending. The imports to sales ratio fell from an 11-year high of 0.378 to 0.397 in the June quarter – not far from 11-year highs. 
The private non-farm inventories to total sales ratio rose from 0.581 to 0.604 in the June quarter.
What are the implications for interest rates and investors? 
In the current September quarter the economy may end up contracting around 1 per cent, due largely to the lockdown in Victoria. Over the 2020 year the economy may contract by around 4 per cent – the biggest annual decline in 75 years. 
But it could’ve been worse. The Reserve Bank initially estimated that the pandemic contraction would be near 10 per cent in the June quarter. And GDP has contracted by an average of 11 per cent in the quarter for the 20 or so advanced economies to report so far. 
There is no shortage of stimulus to get the economy back on its feet. But money is not the problem – this is a health crisis, causing an economic downturn. There are encouraging signs of virus suppression in Victoria and NSW. But the path is uncertain. 
The fiscal roadmap in next month’s federal budget will be critical to economic recovery – as will developments on virus treatments and vaccines. 
Quite amazingly, data today showed a record 7 per cent economic contraction and the sharemarket was untroubled – currently up by around 1.8 per cent. The Aussie dollar eased from highs near US73.80 cents to US73.35 cents after the data release.
CRAIG JAMES is the Chief Economist at CommSec
</body></html>

cjames-5S2v74qSNK

It's not a typical recession: CommSec's Craig James

<html><body>
The Australian Gross Domestic Product fell seven per cent in the June quarter, the largest quarterly fall on record, according to figures released by the Australian Bureau of Statistics today.
This follows a fall of 0.3 per cent in the March quarter 2020, with Australia now officially entering a recession.
The biggest quarterly contraction on record has confirmed Australia’s first recession since the 1990s and its most severe economic blow since World War II.
Head of national accounts at the ABS, Michael Smedes said, “The global pandemic and associated containment policies led to a 7.0 per cent fall in GDP for the June quarter. This is, by a wide margin, the largest fall in quarterly GDP since records began in 1959.”
"The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus."
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/9/2/GDP.jpg" alt="">
Net trade contributed 1.0 percentage points to GDP. Imports of goods fell 2.4 per cent, with falls in consumption and capital goods reflecting weak domestic demand. Imports of services fell 50.5 per cent and exports of services fell 18.4 per cent, due to restrictions on travel and tourism.
Public demand contributed 0.6 percentage points to GDP, driven by health related spending by the state and local government. Defence spending also increased as personnel were deployed to assist with management of the COVID-19 pandemic.
The household saving to income ratio rose to 19.8 per cent from 6.0 per cent, driven by the fall in consumption expenditure. Hours worked fell a record 9.8 per cent, outpacing the record 2.5 per cent decline in wages which were supported by JobKeeper payments. Social assistance benefits in cash rose a record 41.6 per cent, due to increased number of recipients and additional support payments.
General government net saving fell to -$82.6 billion from $1.2 billion in the March quarter 2020.
CBA was one entity that was off the mark with a less pessimistic outlook than the market consensus, which was a 6 per cent contraction for the economy.
Commonwealth Bank economist Kim Mundy believed GDP will have fallen by 5.4 per cent in the June quarter.
A month ago CBA changed their forecasts, with head of Australian economics Gareth Aird saying the Melbourne lockdowns have changed their thinking.
They cut the GDP growth forecast to -4.2 per cent for 2020, worse than the -3.8 per cent predicted before the lockdowns.
"There will be a huge disparity in economic outcomes between Victoria and the rest of Australia in Q3 20", Aird said.
Economist Lindsey David tweeted, "That GDP report was once-in-a-lifetime."
APAC economist Callum Pickering said, "over the past decade the Australian economy has expanded by just 1.7% a year on average. Adjusted for population growth and real GDP has increased by just 0.2% a year. Even before COVID-19 we had experienced a long period of relatively low growth.
</body></html>

wdavis-8cCN98p7xp

GDP plummets 7%, the largest fall ever, as Australian recession begins

<html><body>
EXPERT OBSERVER
It’s wrong to expect a “snap-back” at shopping centres, food courts, cinemas and other places where people used to gather to spend money.
We’ve identified three reasons why spending in physical stores on goods like clothes is likely to remain much lower than it was for a long time.
<h2>1. Fear, much of it age-based</h2>
First, even when governments relax restrictions, lots of people will still be worried and will go out less. Unless there are zero cases for several weeks in a state or city, many people will remain reluctant to go out.
This is why we have previously argued that there is a big dividend in <a href="https://theconversation.com/the-case-for-endgame-c-stop-almost-everything-restart-when-coronavirus-is-gone-134232" target="_blank">eliminating</a> COVID-19 in the style of New Zealand, the Northern Territory, and South Australia, rather than bumping along with “suppression” – and several new locally-acquired cases a day – as Victoria is still doing.
This reluctance to go out and spend, irrespective of government restrictions, could be seen in Australia before government restrictions were imposed, as shown on the “Consumers and mobility” tab of the <a href="https://grattan.shinyapps.io/covid-econ-tracker/" target="_blank">Grattan Econ Tracker</a>.
The effects of fear shouldn’t be underestimated.
Spending in <a href="https://arxiv.org/pdf/2005.04630.pdf" target="_blank">Sweden</a> has fallen almost as much as in Denmark, even when Denmark was in lockdown and Sweden had minimal restrictions. Swedes are afraid to go out, particularly if they are old.
Spending by people aged 70+ has fallen further in Sweden than in Denmark, and 60-69 year-olds have cut their spending by about the same amount in both countries.
This isn’t surprising. COVID-19 is much more deadly for older people.
Age-based fear is a challenge for retailers because older households now spend significantly more than younger households. 25 years ago it was the <a href="https://grattan.edu.au/wp-content/uploads/2019/08/920-Generation-Gap.pdf" target="_blank">other way around</a>.
<h2>2. Time to form new habits</h2>
Second, we are likely to keep spending on different things, and using different channels, even after restrictions are lifted.
Habits tend to form when behaviour changes consistently. They strengthen over time, and are particularly sticky once behaviour has been consistent for a <a href="http://repositorio.ispa.pt/bitstream/10400.12/3364/1/IJSP_998-1009.pdf" target="_blank">period of months</a> – and we’ve been living with lockdown for that long in Australia.
Once formed, the new habits can persist unless there is another shock.
Australians have become used to doing more of their purchasing online. They have become used to spending more on living comfortably at home, and less on clothes for the office and to go out.
After the shutdown, people are likely to continue to work from home more often.
The habits of shopping remotely, and spending more on home furnishings and less on clothes, are likely to continue, and they would be likely to continue even if COVID-19 vanished tomorrow.
<h2>3. Global recession</h2>
Third, irrespective of COVID-19 regulations and behaviours, we are heading into an “old-fashioned”, <a href="https://www.propertyobserver.com.au/https://openknowledge.worldbank.org/handle/10986/33748" target="_blank">globally synchronised, deep recession</a>.
For the moment, <a href="https://theconversation.com/the-key-to-the-success-of-the-130-billion-wage-subsidy-is-retrospective-paid-work-135042" target="_blank">JobKeeper</a>, the temporarily-boosted <a href="https://theconversation.com/scalable-without-limit-how-the-government-plans-to-get-coronavirus-support-into-our-hands-quickly-134353" target="_blank">JobSeeker</a> payment, and a recent <a href="https://business.nab.com.au/wp-content/uploads/2020/05/NAB-Data-Insights-May-Report.pdf" target="_blank">bounceback</a>, have resulted in <a href="https://www.commbank.com.au/guidance/business/commbank-card-spending-data-shows-modest-lift-202006" target="_blank">spending on credit and debit cards</a> a bit more than this time last year.
But unemployment jumped to <a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0">7.1%</a> on Thursday. That official rate understates how bad things are.
In May an extra 227,700 Australians lost their jobs (on top of 607,400 in April).
But only 85,000 of them were counted as unemployed. When and if the bulk of those people look for work, the unemployment rate will climb further.
Employed Australians, total
<a href="https://images.theconversation.com/files/342603/original/file-20200618-41230-ffex5d.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/342603/original/file-20200618-41230-ffex5d.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Includes Australians regarded as still employed because they are on JobKeeper. <a class="source" href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0" target="_blank">ABS 6202.0</a>
After JobKeeper <a href="https://theconversation.com/whatll-happen-when-the-moneys-snatched-back-our-looming-coronavirus-support-cliff-138527" target="_blank">ends in September</a> (or is <a href="https://theconversation.com/how-to-improve-jobkeeper-hint-it-would-help-not-to-pay-businesses-late-140435" target="_blank">phased out</a> as a result of the government’s review) many of the three million people on it will also become counted as unemployed.
Australians who have lost their jobs are likely to spend less than they did before.
After each of the previous two recessions it took <a href="https://grattan.edu.au/news/dont-expect-a-v-shaped-recovery-after-the-pandemic/" target="_blank">years</a> for employment to recover.
<h2>Spending need not recover after COVID</h2>
These three factors – fear, new habits, and recession – are present in countries and regions that seem to be well clear of coronavirus.
Much of China has been free of most government restrictions for months. Manufacturing and infrastructure spending has largely returned to pre-COVID levels.
But consumer activity is still <a href="https://tradingeconomics.com/china/retail-sales-annual" target="_blank">below pre-COVID levels</a>, and it is inching up only slowly.
Australia might well see an “opening party” on the day each particular COVID-19 restriction is lifted.
But after that, the best guess is that consumer spending will remain very subdued and refocused for a long time.
For those in the hardest-hit <a href="https://theconversation.com/which-jobs-are-most-at-risk-from-the-coronavirus-shutdown-134680" target="_blank">sectors</a> and <a href="https://blog.grattan.edu.au/2020/06/the-latest-jobs-data-shows-urban-electorates-are-now-being-hit-hardest-by-covid-19/" target="_blank">regions</a> – particularly arts and recreation, hospitality, and clothing – the pain will continue long after the restrictions are lifted.<img src="https://counter.theconversation.com/content/140628/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/john-daley-1870" target="_blank">John Daley</a>, Chief Executive Officer, <a href="https://theconversation.com/institutions/grattan-institute-1168" target="_blank">Grattan Institute</a>
This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/retail-wont-snap-back-3-reasons-why-covid-has-changed-the-way-we-shop-perhaps-forever-140628" target="_blank">original article</a>.
</body></html>

j.ballantyne1990-6AQqhLzZaK

Retail won’t snap back. 3 reasons why COVID has changed the way we shop, perhaps forever

<html><body>
EXPERT OBSERVER 
<div>GDP growth was estimated at a seasonally adjusted -0.3 per cent for Q1, leading to the inevitably mind-numbing 'recession we had to have' headlines. Over the year GDP growth slowed to +1.4 per cent. </div>
<div> </div>
<div>Q1 could yet be revised up, of course - especially the very significant negative drag from inventories - and therefore the technical definition of a recession may yet be avoided. </div>
<div> </div>
<div>However, given that GDP growth in Q2 will clearly be severely negative this is largely semantics.</div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-Pt_Gww_Reuc/XtgnFuMgFeI/AAAAAAAA2HQ/vLAGeFkHn3M9QOwI61ZNNpoOjf5yT5T5ACNcBGAsYHQ/s640/A1.jpg" width="640" height="372" data-original-height="804" data-original-width="1381"></div>
 Nominal GDP growth over the year is floundering again. 
<div class="separator"><img src="https://1.bp.blogspot.com/-ZfLhyXG8ULc/XtgnF37tlzI/AAAAAAAA2HU/Mx852eP3OhEMtJBOxcGwPqRhzAM8SiTUQCNcBGAsYHQ/s640/A2.jpg" width="640" height="362" data-original-height="794" data-original-width="1401"></div>
 
<div>Real net national disposable income, as a proxy for living standards, has been fairly flat over the past six months. </div>
 
<div class="separator"><img src="https://1.bp.blogspot.com/-NKWTgSUhZQs/XtgnF3i7aWI/AAAAAAAA2HY/CLQfAtv0DaM99MRoKMCyFkKHUTr-cnZfgCNcBGAsYHQ/s640/A3.jpg" width="640" height="368" data-original-height="804" data-original-width="1394"></div>
 And the terms of trade have held up well to date, well above the long-run average. 
<div class="separator"><img src="https://1.bp.blogspot.com/-HXTaXlH0wVI/XtgnGmiASCI/AAAAAAAA2Hg/GtnNP1jk36kKzW5yBz4CndeKKYu-AX0eQCNcBGAsYHQ/s640/A5.jpg" width="640" height="378" data-original-height="800" data-original-width="1348"></div>
 
<div>Meanwhile, the interest payable on dwellings continues to fall, now down to the lowest level since 2009 despite the dramatic increase in the dwelling stock over that time.</div>
 
<div class="separator"><img src="https://1.bp.blogspot.com/-MgkJhBkDCVg/XtgnGUlHiqI/AAAAAAAA2Hc/AKW1kQicX989EsVNqJ18tMPoeYSvBpyeQCNcBGAsYHQ/s640/A4.jpg" width="640" height="376" data-original-height="803" data-original-width="1364"></div>
 
<div>Stimulus mixed</div>
<div> </div>
<div class="separator"> </div>
<div>With the Reserve Bank fading quietly into the background, the government must now do the heavy lifting with its fiscal stimulus.</div>
<div> </div>
<div>The Aussie dollar has accordingly soared back towards US 70 cents, in turn slowing the adjustment process. </div>
<div> </div>
<div>The terms of the $688 million renovation stimulus missed the mark completely, leaving such a skinny cohort of prospective qualifying applicants that the government needn't have bothered with it. </div>
<div> </div>
<div>Essentially you must own a house and undertake an expensive renovation within the next few months, but without having a high income (while a whole heap of renovation options are excluded): </div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-F-4fNLv_G3U/XtgoiKsKFjI/AAAAAAAA2H4/wHgQFtbv05Ixdzimj9Xru2Jnvr8LUCxXQCNcBGAsYHQ/s640/rebo.jpg" width="640" height="606" data-original-height="723" data-original-width="762"></div>
<div>
 Perhaps some retirees might qualify for a grant, and maybe a few young homeowners with wealthy parents. 
</div>
<div>The terms of the HomeBuilder grant scheme for new homes are far better targeted, and will undoubtedly be a net positive for the industry. </div>
<div>
 PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
</div>
</body></html>

pwargent-M4siyDbqQY

GDP headed down, recession all but locked in: Pete Wargent

<html><body>
GUEST OBSERVATION
It is well-established that recessions hit young people the hardest.
We saw it in our early 1980s recession, our early 1990s recession, and in the one we are now entering.
The latest <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/6160.0.55.001Main%20Features4Week%20ending%202%20May%202020" target="_blank">payroll data</a> shows that for most age groups, employment fell 5% to 6% between mid-March and May. For workers in their 20s, it fell 10.7%
The most dramatic divergence in the fortunes of young and older Australians came in the mid 1970s recession when the unemployment rate for those aged 15-19 shot up from 4% to 10% in the space of one year. A year later it was 12%, and 15% a year after that.
<hr>
Unemployment rates 1971-1977
<a href="https://images.theconversation.com/files/336271/original/file-20200520-152288-16b5n6o.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/336271/original/file-20200520-152288-16b5n6o.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> <a class="source" href="https://www.propertyobserver.com.au/https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6203.0">ABS 6203.0</a>
<hr>
At the time, 15 to 19 years of age was when young people got jobs. Only one third completed Year 12.
What is less well known is how long the effects lasted. They seem to be present more than 40 years later.
The Australians who were 15 to 19 years old at the time of the mid-1970s recession were born in the early 1960s.
In almost every recent <a href="http://positivepsychology.org.uk/subjective-well-being/" target="_blank">subjective well-being</a> survey they have performed worse that those born before or after that period.
Subjective well-being is determined by asking respondents how satisified they are with their lives on a scale of 0 to 10, where 0 is totally dissatisfied and 10 is totally satisfied.
Australia’s Household, Income and Labour Dynamics survey (<a href="https://melbourneinstitute.unimelb.edu.au/hilda" target="_blank">HILDA</a>) has been asking the question since 2001.
In order to fairly compare the life satisfaction of different generations it is necessary to adjust the findings to compensate for other things known to affect satisfaction including income, gender, marital status, education and employment status.
Doing that and selecting the 2001, 2006, 2011 and 2016 surveys to examine how children born at the start of the 1960s have fared relative to those born earlier and later, shows that regardless of their age at the time of the survey, they are less satisfied than those born at other times.
<hr>
Subjective wellbeing by birth cohort over four HILDA surveys
<a href="https://images.theconversation.com/files/336287/original/file-20200520-152311-h03y48.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/336287/original/file-20200520-152311-h03y48.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
Subjective well-being on a scale of 0 to 10 where 0 is totally dissatisfied and 10 is totally satisfied. <a class="source" href="https://melbourneinstitute.unimelb.edu.au/hilda" target="_blank">Regressions available upon request</a>
The consistency of lower levels of subjective well-being reported by the 1961-1965 birth cohort suggests something has had a lasting effect.
An obvious candidate is the dramatic increase in the rate of youth unemployment in at the time many of this age group were trying to get a job.
Over time, labour markets can recover but the scars of entering the labour market during a time of sudden high unemployment can be permanent.
The impacts of the early 1980s and early 1990s recessions on young people were alleviated somewhat by the doubling of the <a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/4220.0" target="_blank">Year 12 retention rate</a> and later by the doubling of <a href="https://www.education.gov.au/student-data" target="_blank">university enrolments</a>.
But the education sector is maxed out and might not be able to perform the same trick for the third recession in a row.
Reinvigorating apprenticeships and providing cadetships for non-trade occupations might help. Otherwise the effects of the 2020 recession on an unlucky group of Australians might stay with us for a very long time.<img src="https://counter.theconversation.com/content/137236/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/jenny-chesters-869325" target="_blank">Jenny Chesters</a>, Senior Lecturer/ Research Fellow, <a href="https://theconversation.com/institutions/university-of-melbourne-722" target="_blank">University of Melbourne</a>
This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/recessions-scar-young-people-their-entire-lives-even-into-retirement-137236" target="_blank">original article</a>.
</body></html>

Recessions scar young people their entire lives, even into retirement

<html><body>
EXPERT OBSERVER
More carnage overnight with US stocks down another -10 per cent again in early trade to smash into the circuit breakers, with the Dow Jones shedding -36 per cent in less than a month, before a late rally.
<div id="post-body-2582528096951691734" class="post-body entry-content">
The oil price (WTI) was down at nearly $20 at one stage, before a bouncing to $22, nestling in at the lowest level since the early 2000s...so there are some value plays emerging there.
But overall, cash is king at the moment while stock market valuations continue to mean revert.
This risks sounding like a broken record, but it bears repeating that overall US stocks are still far too expensive given the outlook, and could yet fall another -30 per cent even from here (if things got really bad they could go much lower).
 
<div class="separator"><img src="https://1.bp.blogspot.com/-lq18M1eZhts/XnKhiiXFqbI/AAAAAAAA0vY/zUHAiE2ggegAqwyOYEAT9qR84VyY8a3tQCNcBGAsYHQ/s640/CAPE.jpg" width="640" height="308" data-original-height="526" data-original-width="1090"></div>
 <div>Source: Shiller PE</div>
 Don't forget that previously healthy earnings are about to be decimated, with JPM forecasting US GDP to shrink by 4 per cent in Q1 and 14 per cent in Q2. I can't watch another fund manager video demanding that you stay fully invested with them. It's time to step away from the noise and remember the <a href="https://lowrateshighreturns.com/2020/03/16/applying-the-8-timeless-principles-in-a-bear-market/" target="_blank">8 timeless principles</a>! The <a href="https://lowrateshighreturns.com/2020/01/04/maximising-your-long-term-wealth-with-the-kelly-criterion/" target="_blank">Kelly criterion</a> demands that you keep cash aside and live to fight another day - especially when markets are as overvalued as they have been - as better opportunities will always come around in the future. Remember Rule #1: don't lose money. The Aussie market stock index may catch a bid after a European stimulus announcement this morning. This is Lagarde's own 'whatever it takes' moment, but the ECB promising no limits to its commitment to the Euro, and another massive asset purchase programme. Still on the balance of probabilities the Aussie index increasingly looks likely to hit late 2009 levels this week in the 4,800s range this month. This is a swift and brutal lesson in the importance of <a href="https://lowrateshighreturns.com/2019/12/29/the-magic-of-rebalancing/" target="_blank">rebalancing</a> and keeping cash aside for future opportunities arising, with a decade of price gains erased in about 20 trades. Buy and hold at all times has been mistaken at times as a panacea or even a religion, but it's not; you need and do whatever it takes to keep yourself around to capitalise on the opportunities. 'Whatever it takes' moment
 
A historic An historic A momentous day ahead for Australian financial markets.
The Reserve Bank is set to make a landmark announcement at 2.30pm Sydney time, with Governor Lowe lined up to speak thereafter at 4pm.
Lowe will likely discuss an emergency cut in the official cash rate to 0.25 per cent, central bank purchases of government bonds, the ongoing conducting of repo operations, and other measures to ensure that credit continues to flow to households and businesses. 
Global cases of the coronavirus continue to increase at this stage, suggesting that a serious disruption to the global economy lies squarely ahead, although known cases in Australia remain relatively low at this stage. 
 
<img src="https://1.bp.blogspot.com/-PpQcwNO9df0/XnKlqpCKgHI/AAAAAAAA0vg/zHXvgYR03PYK6i4HO-HDdOhrRudmyWKYACNcBGAsYHQ/s640/CV.jpg" width="640" height="388" data-original-height="503" data-original-width="828">
Daily new cases hit fresh highs yesterday (the February 12 spike was a data collation or measurement issue).
<div class="separator"><img src="https://1.bp.blogspot.com/-QesSeFEsy4A/XnKs4AK_b6I/AAAAAAAA0vo/i5BTQupD2EEaQuoc-z-AD4xeoeGEq6pVACNcBGAsYHQ/s640/Cases.jpg" width="640" height="342" data-original-height="482" data-original-width="897"></div>
 The biggest surge in cases lately has been in Italy, with 35,713 cases and 2,978 deaths recorded to date. Recession ahead Major bank economists see the Aussie unemployment rate rising to 7 to 8 per cent (not that you can really forecast in the present environment), while the government's initial stimulus package probably isn't enough to save the economy from printing negative growth for both the first and the second quarter of the year.  
This would lock in Australia's first recession in three decades. 
Recent years been characterised by the Reserve Bank 'leaning against' asset prices and continually undershooting the inflation target, with persistently slow growth in wages and living standards.
Nobody could've predicted the great trifecta of drought, bushfires, and a global pandemic, of course, but the economy was already running well below potential before these shocks. 
At this stage all we have is mostly anecdotes about the likely state of the economy, but so many of them reflect sharp drops in revenue, income, commissions, and profits, that this is no time for half measures.
Markets will be looking for a 'whatever it takes' pledge and from Lowe, and the use of unlimited monetary ammunition until things stabilise. Anything less than that will be brushed aside in the savage market conditions. From the government's perspective infrastructure programs and tax cuts aren't going to cut it. What's needed is putting cash into the hands of households and small businesses today...to prevent the R from becoming a D. They'll write books about all this next year; it's been a momentous month. 
PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
</div>
</body></html>

Infrastructure programs and tax cuts won't be enough: Pete Wargent

<html><body>
EXPERT OBSERVER
On Monday, March 9, we forecast that the Australian economy would experience a recession in 2020 with the economy contracting by 0.6% in the first half although we expected growth in the second half of 2.2% as the economy recovered from the disruption associated with COVID-19.
Our central assumption was that the COVID-19 threat would peak in the June quarter and by quarter’s end confidence and activity would begin to recover.
We described 2020 as a severe disruption or technical recession to differentiate from the last two recessions in Australia when the unemployment rate spiralled from 6% to 11%.
Our figuring last week set the forecast peak in the unemployment rate at around 5.8%- 6%, up from the current level of 5.3%.
The relatively modest increase in the unemployment rate was particularly reflective of the expectation that the disruption would be relatively short when compared to earlier recessions and viewed as such by business that there would be a degree of labour hoarding.
Later in the week we analysed the Government’s $17.6 billion Stimulus Package and concluded that the Package would not be sufficiently stimulative to avert a recession in 2020.
Our key assumptions around the Package focussed on the likely impact on spending from the $4.76 billion payments to pensioners and social security recipients and the instant asset write off provisions.
We assessed that pensioners would save around 75% of payments and social security recipients would save around 60%.
Pensioners are likely to be cautious given the collapse in bank deposit rates and health concerns. In that regard the 13.8% collapse in confidence amongst the over 65 year olds in the latest Westpac MI Consumer Sentiment Survey signals caution. Social security recipients will be unnerved by the COVID -19 threats and discouraged by the “one off” nature of the income boost.
We differed with the Government’s figuring around the lift in business investment associated with the “instant asset write off” package assuming around $2 billion compared to the Government’s estimate of $5-6 billion. With business confidence fragile going into the COVID-19 shock and weakening further we expect businesses will be cautious around boosting spending.
Nevertheless, we noted that the Package was likely to boost activity in the June quarter by 0.4% of GDP largely offsetting the estimated contraction. However we noted that conditions had deteriorated over the week and the “pre-package” contraction was now likely to be larger than estimated early last week.
In that regard our revised estimates of GDP growth in the March and June quarters, after adjusting for the Stimulus Package, are minus 0.7% and minus 0.3% respectively - a total contraction of 1% of GDP.
Recall that our estimate early last week was a total contraction of 0.6%, before adjusting for the Stimulus Package.
So what has changed?
Most notably we have seen mandatory quarantine requirements for international travellers; restrictions on large public gatherings; a brutal sell off in the global equity markets; and reports of limited liquidity in government and corporate debt markets.
Not surprisingly, as these events have moved quickly, we have made some major changes to our estimates of the impact of COVID-19 in both the March quarter and the June quarter.
We have increased our estimate of the shock to the most exposed component of consumer spending (hotels; restaurants and cafes; recreational services; and air travel) to minus 40% over the two quarters from minus 25%.
We have increased the expected shock to consumer durables to minus 7% and revised up the negative impact on home renovations and additions.
We expect outbound and inbound tourism to contract by 80% over the two quarters.
Overall we now see consumer spending contracting by 0.1% (March quarter) and 2.8% (June quarter) before recovering by 1.9% in the September quarter and 1.0% in the December quarter.
We have also made adjustments to inventories; government spending (lifting health expenditure further).
Growth through 2020 is now estimated at 1.5% with minus 1% in the first half and 2.5% in the second half.
The unemployment rate is now forecast to reach 7% by October 2020 (up from the previous estimate of 5.8%-6.0%) due to the larger negative shocks to the labour intensive sectors such as recreation; tourism; education; renovations and additions; and dwelling construction. This lift in the unemployment rate is despite reducing the participation rate from 66.1% to 65.4% as a discouraged worker effect – that is, as workers respond to a deteriorating labour market the participation rate is likely to decline.
Please note that these forecasts are not based on Australia following a European style full lock down. Not surprisingly, the forecasts are subject to downward revision in the event of such an occurrence.
This article was <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/42362" target="_blank">first published on WestpacIQ</a>
<div>
BILL EVANS is the <a href="https://www.westpac.com.au/news/authors/bill-evans/" target="_blank">chief economist at Westpac</a>.
</div>
</body></html>

Westpac revise 2020 forecasts, deeper recession and 7% unemployment: Bill Evans

<html><body>
Nearly 90 per cent of Finder.com.au's RBA Survey have predicted Australia will see a recession this year.
The 15 strong survey of experts and economists saw 13 say a recession was now likely. Back in December, around the same number of experts said there wouldn't be a recession.
Graham Cooke, insights manager at Finder.com.au, said fear of recession among the general public had been brewing for a while, although economists had until now, were more optimistic. "We've seen fear of recession among the Australian public grow over recent months, while the vast majority of economists were saying it wouldn't happen.  “COVID-19 pouncing unexpectedly on an already weakened Australian economy, has very much changed the game."
Two thirds of the experts surveyed however believe any recession would be over by the end of the year.
Over half of the survey (53%) predict an emergency rate cut this week, which would see rates drop to a historic low 0.25 per cent.
"Only a few days before the last RBA cut two weeks ago, 85% of economists said they did not expect a cut and only half thought the ASX 200 would drop by 10% in value", Cooke said. “Within a week, we had a cut and a 20% drop. This signals the sheer severity and speed of the coronavirus impact." Around half of the economists who responded to the last-minute survey (53%) expected the RBA to make an emergency cash rate cut this week.
Yesterday Westpac announced that they expect an interest rate cut and an announcement for quantitative easing to happen this week.
Most experts believe house prices will be negatively affected, with 20 per cent expecting a significant drop and 60 per cent expecting a slight drop.
Cooke said a downturn in the market could present a window for cashed-up Aussies ready to buy. “If you’re one of the first-time buyers who missed out on the 2019 price dip, 2020 could provide a second bite at the apple.  “Keep a close eye on your local market, but be careful – nobody knows what may be around the corner or how long this coronavirus dampening could really last,” Cooke said.
 
</body></html>

Recession

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Recession

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News