So we here in Australia use a very rough and ready definition of what constitutes a recession – two consecutive quarters of negative (seasonally adjusted) GDP growth. Very rough and ready and I suspect few economists would die in a ditch defending that definition. But there it is, the definition that we use.
Right now the ALP and its fellow travellers are crowing about a a “per-capita recession”. According to the latest ABS data Australia has just recorded two consecutive quarters of negative (seasonally adjusted) negative per capita GDP growth.
Shock. Horror. Surprise.
Yet the last time this calamity befell the Australian economy was in 2006. Remember 2006? The mining boom? The economy going bang-busters? Budget surpluses, tax cuts, and zero net debt as far as the eye could see? Unemployment running rampant at less than 5%?
A better indicator of recession has been proposed by Saul Eslake – if unemployment rises by 1.5% over a 12 month period then the economy is in recession. Looking at ABS unemployment statistics this indicator suggests Australia experienced a recession in 2009, and before that in 1990 – 1992.
So great talking point but somewhat less substance to it than the luvvies would like.