It is a cliché, but Australians are living in unparalleled times.
Consumer price inflation is the highest since 1990.
Interest rates have risen steeply from the unprecedented low set during the pandemic. Government spending as a share of GDP has not been so high since World War 2.
Economic models do not predict turning points in the economy.
Perhaps it will all work out well, but we do need to prepare for the possibility, likelihood even, of an economic recession. We need contingency plans in place before recession happens.
There is little doubt that strong economic growth will not occur in the near future.
We have compiled several leading indicators, one of which has predicted four of the last five recessions – the exception being the pandemic recession of 2020. Several other charts are also suggesting recession, although some are more benign. Some of the data is proprietary.
This series of reports has been designed to provide timely data to assist in judgemental estimates of the likelihood of recession. There will be updates in mid-May, after the federal budget, and in early June after our proprietary data has been updated. More updates will be provided frequently thereafter. If a recession does occur, our updates will indicate the likelihood of recovery.